Informist, Monday, Jul 18, 2022

By Pratiksha and Srijonee Bhattacharjee

NEW DELHI – The rupee gave up early gains and settled at a record closing low against the greenback for the sixth consecutive session today due to continuous dollar purchases by oil marketing companies and importers, dealers said. 

"I think, there was some panic among the importers since the rupee is almost near the 80 (a dollar) level," a dealer with a private bank said. "Importers aren't seeing any respite for the rupee in the next few months. The recent RBI measures for the rupee are not helping and inflows are also not there, so the rupee is bound to sustain the above 80 levels."

The Indian unit ended at a record closing low of 79.9700 a dollar as against 79.8775 a dollar on Friday. Earlier today, the rupee to an all-time low of 79.9800 a dollar.  

This concern was also reflected in importers' behaviour in the forwards market, where companies started to hedge their deliverables by buying dollars for delivery after two to three months, dealers said. Importers are generally found to resist hedging their foreign currency risk as they try to avert the cost of premiums.

Today, the Indian currency opened higher at 79.7900 a dollar because the dollar index fell from multi-year highs, dealers said. 

The dollar index fell as investors moderated their bets on an aggressive interest rate hike by the US Federal Reserve after the University of Michigan’s consumer sentiment survey showed that the medium-term inflation expectation in the US cooled to 2.8% from 3.1%. 

Market participants are now expecting a 75-basis-point rate hike in the Fed meeting on Jul 26-27.

At 1645 IST, the dollar index, which measures the strength of the US currency against a basket of six major currencies, was at 107.31 compared with 108.06 on Friday. It was at 108.54 on Thursday.

Two hours into the trade, the rupee fell to the 79.90 a dollar level, as banks purchased the greenback on behalf of importers who wanted to take advantage of the relatively lower dollar/rupee levels of 79.72-79.74 a dollar, dealers said. 

Moreover, state-owned banks persistently purchased dollars on behalf of oil marketing companies, which also weighed on the Indian unit, dealers said. 

Prices of crude oil rose today as tight supply offset recession fears and worries that COVID-19 lockdowns in China will result in reduced fuel demand. 

At 1645 IST, the September contract of Brent crude oil on the Intercontinental Exchange was at $103.30 a barrel as against the previous close of $101.16 a bbl. 

As importers stepped up their dollar purchases, the Indian unit fell to a fresh record low of 79.9800 a dollar, dealers said. 

However, the Reserve Bank of India stepped in to sell dollars to restrict the rupee's fall, dealers said. 

Dealers said the central bank wanted to prevent the rupee from breaching the psychologically-significant level of 80-a-dollar.

"The RBI wasn't very aggressive in its dollar sales today. It just wanted to protect the rupee from breaking the 80 (a dollar) level," a dealer with a state-owned bank said. 

Domestic equities were in the green throughout the day, which also provided support to the Indian unit, dealers said. The Nifty 50 and the Sensex ended 1.4% higher each.

FORWARDS

Premium on dollar/rupee forwards rose slightly because some importers booked forward contracts for the next two to three months on worry that the rupee may fall below 80 a dollar in the coming days, dealers said. 

The premium on one-year dollar/rupee contract was 247.00 paise, against 243.35 paise on Friday. On an annualised basis, the premium was at 3.09% against the previous close of 3.05%.

Dealers said that apart from buying dollars in the spot market, importers, primarily oil companies, bought dollars even for delivery two or three months later. With oil prices rising over $100 per bbl, amid global strength in the US dollar, oil marketing companies rushed to hedge their foreign currency risk for the near months, dealers said.

This led to a rise in premia on near-month contracts that was transmitted to the premium on the one-month dollar/rupee forward contract.

OUTLOOK

On Tuesday, the rupee will take cues from overnight movement in the dollar index and Brent crude oil prices, dealers said.

Dealers are say that the RBI will continue to intervene through dollar sales to protect the rupee from depreciating sharply against the dollar.

Dealers have pegged immediate key technical support for the rupee at 80.00 a dollar.

During the day, the rupee is seen at 79.70-80.20 a dollar.

India Rupee: Premia rise as importers, oil companies buy fwd dollar

MUMBAI – The premiums on dollar/rupee forwards rose slightly because some importers booked forward contracts for the next two-three months on worry that the rupee may fall below 80 a dollar levels in the coming days. 

The premium on one-year dollar/rupee contract was 246.33 paise, against 243.35 paise on Friday. On an annualised basis, the premium was at 3.08% against the previous close of 3.05%.

Dealers said apart from buying dollars in the spot market, importers, primarily oil companies, bought dollars even for delivery two or three months later. With oil prices rising over $100 per barrel and amid global strength in the dollar, oil marketing companies rushed to hedge their foreign currency risk for the near months, dealers said.

This led to a rise in premia on near-month contracts that was transmitted to the premium on the one-month dollar/rupee forward contract.  (Srijonee Bhattacharjee)

India Rupee: Off highs as banks buy dollars for oil cos, importers

NEW DELHI – The rupee came off its earlier highs against the greenback as state-owned banks persistently purchased dollars on behalf of oil marketing companies, dealers said. 

Prices of crude oil rose today as tight supplies offset recession fears and worries that COVID-19 lockdowns in China will result in reduced fuel demand. 

At 1330 IST, the September contract of Brent crude oil on the Intercontinental Exchange was at $103.84 a bbl as against the previous close of $101.16 a bbl. 

Moreover, some banks purchased the greenback on behalf of importers who wanted to take advantage of the relatively lower dollar/rupee levels, which also weighed on the Indian unit, dealers said. 

Dealers have pegged the immediate technical support for the rupee at 80.00 a dollar.

For the rest of the day, the Indian unit is seen moving in the range of 79.6000-80.0000 a dollar.  (Pratiksha)

India Rupee - Asia FX: Most up as dlr index falls from multi-yr highs

NEW DELHI – Most Asian currencies were up against the greenback today because the US dollar index fell from multi-year high levels.

The gains in Asian units were also due to positive cues from local equities. 

The dollar index fell as investors moderated their bets on an aggressive interest rate hike by the US Federal Reserve after the University of Michigan’s consumer sentiment survey showed the medium-term inflation expectation in the US cooled to 2.8% from 3.1%.

Most market participants expect a 75-basis-point rate hike at Fed's meeting on Jul 26-27.

At 1138 IST, the dollar index was at 107.88, compared with 108.06 on Friday. It was at 108.54 on Thursday.

The South Korean won rose 0.8% against the greenback, the most among its Asian peers. Both the Chinese yuan and the Taiwan dollar rose 0.2% against the greenback. (Pratiksha)

 India Rupee: Rises as dollar index weakens, domestic shares gain

NEW DELHI – The rupee rose against the greenback today because the US dollar index fell from multi-year high levels, dealers said. 

The dollar index weakened as investors rolled back their bets on an aggressive interest rate hike by the US Federal Reserve after the University of Michigan's consumer sentiment survey showed that the medium-term inflation expectation in the US cooled to 2.8% from 3.1%. 

Currently, market participants expect a 75-basis-point rate hike in the upcoming Fed meeting on Jul 26-27.

At 0929 IST, the dollar index, which measures strength in the US currency against a basket of six major currencies, was at 107.79 compared with 108.06 on Friday. It was at 108.54 on Thursday.

Moreover, a rise in domestic and Asian share indices also supported sentiment for the Indian unit, dealers said. At 0929 IST, both the Nifty 50 and the Sensex were up 0.8% each.

"The buying (of dollars) on dips sentiment is still there in the market," a dealer with a state-owned bank said. "Whether the rupee will breach the 80 level still depends on how long the RBI helps in sustaining these levels."

Dealers have pegged the immediate technical support for the rupee at 80.00 a dollar.

For the rest of the day, the Indian unit is seen moving in the range of 79.6000-80.0000 a dollar.  (Pratiksha)

India Rupee: Expected range for rupee - Jul 18

NEW DELHI – Following are the expected support and resistance levels for the rupee, as forecasted by leading banks and brokerages in an Informist poll:

(Pratiksha)

End

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

Edited by Aditya Sakorkar

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