Informist, Monday, Nov 29, 2021

By Arushi Jain

MUMBAI – The rupee ended at its lowest level in six weeks against the dollar today because of concerns over the new variant of coronavirus, which led to worries about the pace of economic recovery, said dealers.

The rupee closed at 75.0975 a dollar compared with 74.8700 a dollar at 1530 IST on Friday. The local unit ended at its lowest level since Oct 18.

Investors globally are of the view that the new strain Omicron, first detected in South Africa, could set back months of efforts to revive the world economy.

Countries worldwide have reported cases of the Omicron variant and as a precautionary measure, several have announced travel restrictions. Israel has banned all foreign travellers from entering the country.

These developments and worries dampened investor appetite for riskier assets and led foreign banks to purchase dollars for foreign fund outflows from Indian equities, which further weighed on the Indian unit, said dealers.

Sentiment for the rupee was further weakened as banks stepped in to place fresh bets in favour of the US currency, on behalf of traders, noting strength in the dollar globally, dealers said.

At 1625 IST, the dollar index, which measures the strength of the US currency against a basket of six major currencies, was at 96.17 compared with 96.07 on Friday. It was at 96.88 on Thursday.

The rupee fell to the day's low of 75.1575 a dollar and depreciated over 0.3% since the last month.

"I feel the weakness in rupee is because of risk-off sentiment," said a dealer with a brokerage. "Next week, good (foreign fund) inflows may be seen and you may see the rupee back at 74.70/$1 levels."

Dealers have now pegged strong technical support for the rupee at 75.2000 a dollar.

Market participants are now looking forward to the speeches of US Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen on Tuesday and Wednesday, respectively.

"On the global data front...the US nonfarm payrolls will be closely watched on Friday. In addition, the updates regarding the new COVID-19 variant about which very little is known as of now and the Fed's action plan will keep driving the volatility and direction of the forex market in the days to come," said a dealer with a brokerage.

FORWARDS

Premium on the dollar/rupee forwards contract ended marginally up due to dollar purchases by foreign banks for forward delivery on behalf of importers, dealers said.

On an annualised basis, premium on the one-year, exact-period dollar/rupee contract was flat at 4.71%. The premium was at 353.47 paise compared with 352.050 paise on Friday.

OUTLOOK

On Tuesday, the rupee may take opening cues from overnight movement in the dollar index.

Foreign banks are expected to sell the greenback for overseas investments into Indian companies raising funds, which may support the local unit, dealers said.

Star Health and Allied Insurance Co's three-day initial public offering will open for subscription on Tuesday. The company is looking to raise around $975 mln.

The adjustment for MSCI's November semi-annual index rebalancing will also take place on Tuesday and the rejig will come into effect from Wednesday. The changes in constituents of the MSCI India Domestic Index will see inclusion of nine stocks like IRCTC, Zomato, Tata Power, leading to a passive flow of around $1.3 bln.

During the day, the Indian rupee is seen at 74.7000-75.2000 a dollar.

India Rupee - World FX: Euro dn before key econ data amid COVID woes

NEW DELHI – The euro fell 0.4% against the dollar ahead of a slew of key economic data releases due later today.

The euro zone business climate and economic sentiment data for November and Spain and Germany's flash inflation data are due today.

Market participants are also waiting for speeches by several officials from the European Central Bank, including President Christine Lagarde later today, for clues on policy normalisation ahead of its meeting on Dec 16. 

The euro was also hit by emergence of cases of the Omicron variant of COVID-19 in the region. However, ECB President Lagarde on Sunday said that the euro zone is better equipped to face the economic impact of the new wave of COVID-19 infections or the Omicron variant.

The New Zealand dollar was up 0.2% against the greenback, after Reserve Bank of New Zealand Chief Economist Yuong Ha said in an interview to Wall Street Journal today that the new Omicron strain is unlikely to alter its rate hike plans.

The dollar edged higher in the European trade, recovering from the new COVID-19 variant fears and boosted by rising US treasury yields.

At 1530 IST, the dollar index, which measures the strength of the US currency against a basket of six major currencies, was at 96.20 compared with 96.07 on Friday. It was at 96.88 on Thursday.

The Australian dollar was up 0.4% against the dollar today. (Pratiksha)

India Rupee: Falls amid concern over new COVID strain, econ recovery

MUMBAI – The rupee fell sharply against the dollar and crossed the 75-a-dollar mark as concerns over the highly transmissible new variant of coronavirus called Omicron led investors to believe that it may derail the pace of economic recovery, said dealers.

The worries over economic recovery emerged after countries worldwide reported cases of the Omicron variant over the weekend and announced restrictions on people travelling from countries in the south of Africa. Israel banned all foreign travellers from entering the country.

Investors are of the view that the new strain, first detected in South Africa, could set back months of efforts to revive the world economy, dealers said.

Moreover, global strength in the dollar further weighed on the rupee as banks stepped in to place fresh bets in favour of the US unit, according to dealers.

At 1049 IST, the dollar index, which measures the strength in the US currency against a basket of six major currencies, was at 96.30 compared with 96.07 on Friday. It was at 96.88 on Thursday.

Meanwhile, Atlanta Federal Reserve President Raphael Bostic said that he expects lesser trouble from the Omicron variant in comparison to the Delta variant, and feels the US economy will be able to withstand its effect in a much better way. 

“Buying (dollars) on dips is the theme in the market today,” said a dealer with a state-owned bank. “Rupee may move around 74.85/$1 to 75.05/$1 levels today since (dollar) buying is happening aggressively."

With key technical support pegged at 75.0500 a dollar, the Indian unit is seen in a range of 74.8000-75.2000 a dollar during the day. (Arushi Jain and Pratiksha)

India Rupee - Asia FX: Most units a tad up; Omicron concerns persist

NEW DELHI – Most Asian currencies rose slightly against the dollar in early Asian trade, amid concerns that the highly transmissible new variant of COVID-19, called Omicron, may hit economic recovery.

Investors are of the view that the new strain, first detected in South Africa, could set back months of efforts to revive the world economy. 

The World Health Organization on Friday designated the new strain as a "variant of concern" and said, based on the preliminary evidence, there is an increased risk of re-infection with this variant.

Asian currencies were also tad up as the dollar came off its 16-month-high levels on Friday due to rising concerns over the Omicron variant.

At 1020 IST, the dollar index, which measures the strength in the US currency against a basket of six major currencies, was at 96.27 compared with 96.07 on Friday. It was at 96.88 on Thursday.

A fall in crude oil prices over the weekend also helped Asian currencies. 

Countries such as South Korea and Indonesia are some of the biggest importers of crude oil.

The Taiwan dollar and the Indonesian rupiah were both up nearly 0.1% against the greenback in early trade.

The Thai baht was down 0.3% after the country announced that it will ban arrivals from eight southern African nations from Dec 1. Arrivals from Botswana, Eswatini, Lesotho, Malawi, Mozambique, Namibia, South Africa and Zimbabwe are forbidden from next month.

The Philippine peso was up 0.15%.  (Shubham Rana)

India Rupee: Expected range for rupee - Nov 29

MUMBAI - The following are the expected support and resistance levels for the rupee, as forecast by leading banks and brokerages in an Informist poll:

(Arushi Jain)

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Ashish Shirke

Cogencis news is now Informist. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2021. All rights reserved.