Informist, Thursday, Jun 9, 2022

By Pratiksha and Srijonee Bhattacharjee

NEW DELHI – Even though the Reserve Bank of India supported the rupee through its sales of the greenback, the rupee ended at a record closing low against the dollar due to continuous purchases of dollars by oil marketing companies and foreign institutional investors, dealers said. 

After moving in a narrow range of 7 paise today, the rupee closed at 77.7650 a dollar. The rupee has depreciated around 4.5% in 2022 so far. Having fallen for six straight sessions, the rupee today posted the longest losing streak this calendar year.

The rupee today saw a record opening low of 77.7500 a dollar, as crude oil prices surged to a 13-week-high, supported by strong demand in the US and a revival in the Chinese economy, after weeks of COVID-19 restrictions in major cities were relaxed earlier this month. 

China is the second-largest consumer of oil in the world and with its biggest business hub, Shanghai, emerging from a two-month lockdown on Jun 1, optimism around demand for crude remains high.

At 1700 IST, the August contract of Brent crude oil on the Intercontinental Exchange was at $123.49 a barrel, against the previous close of $123.58 a bbl.

After the market opened, the rupee traded in a tight range of 77.73-77.77 against the dollar for almost three hours, as losses incurred through oil marketing companies' dollar purchases were somewhat offset by persistent dollar sales on behalf of the Reserve Bank of India, dealers said. 

However, as oil importers stepped up their dollar purchases, the rupee fell past the technical support level of 77.80 a dollar to a fresh record low of 77.8050 a dollar. 

Dealers said persistent purchases of the greenback by foreign banks on behalf of foreign institutional investors also weighed on the domestic unit. 

"There were considerable outflows today. The RBI intervened, but it was not very aggressive," a dealer with a private bank said. "However, the RBI managed to keep the rupee from moving past the 77.85 (a dollar) level."

Some exporters were also said to have sold the greenback right from the start of trade today to take advantage of higher dollar/rupee levels, which provided support to the Indian currency.

A sharp rise in domestic equity indices also supported sentiment for the rupee. The Nifty 50 and the Sensex ended 0.7% and 0.8% higher, respectively.

The rupee traded in a thin range of 77.76-77.80 a dollar for the rest of the session, before closing at 77.7650 a dollar. 

FORWARDS

The premium on dollar/rupee forwards fell because exporters sold the greenback for forward delivery to take advantage of the fall in the rupee against the dollar in the spot market, dealers said.

The premium on one-year, exact-period dollar/rupee contract was at 288.44 paise as against 293.64 paise on Wednesday. On an annualised basis, the premium was 3.71% as against the previous close of 3.76%.

The dollar/rupee exchange rate is a component of the premium that the exporters would receive on selling dollars for forward delivery. Considering that the rupee fell to fresh record lows against the dollar today, these levels would seem attractive to sell forward dollars. 

Premiums also fell because the RBI did not hike the cash reserve ratio on Wednesday, after its monetary policy meeting, contrary to the market's expectation, dealers said. 

OUTLOOK

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

"We are not expecting a lot of volatility in the market. The 77.85 (a dollar) level might be tough to breach. On the lower side, the 77.70 level will we in focus," a dealer with a private bank said. "The buy on dips sentiment should remain as only RBI is the supporting factor for rupee." 

Investors are focusing on the outcome of the European Central Bank's policy meeting, due later today. The central bank is expected to signal a rate hike in July.

Dealers now see strong key technical support for the rupee at 77.85 a dollar.

During the day, the rupee is seen in the range of 77.60-77.90 a dollar.

India Rupee - World FX: Euro steady ahead of ECB policy meet outcome

MUMBAI – The euro was steady against most major currencies ahead of outcome of the European Central Bank’s policy meeting today.

The ECB is expected to confirm its intention towards raising interest rates in July and money markets are pricing in rate hikes of 75 basis points by September.

The dollar also moved narrow range as investors remained cautious ahead of the release of the US consumer price data on Friday. The report is expected to show that inflation remained elevated in May.

At 1633 IST, the dollar index was at 102.44, compared with 102.55 on Wednesday. It was at 102.32 on Tuesday.  (Richard Fargose)

India Rupee: Premiums fall as exporters sell fwd dollars

MUMBAI – Premium on dollar/rupee forwards fell because exporters sold the greenback for forward delivery to take advantage of the fall in the rupee against the dollar in the spot market, dealers said.

The premium on one-year, exact-period dollar/rupee contract was at 289.44 paise as against 293.64 paise on Wednesday. On an annualised basis, the premium was 3.72% as against the previous close of 3.76%.

The dollar/rupee exchange rate is a component of the premium that the exporters would receive on selling dollars for forward delivery. Considering that the rupee fell to fresh record lows against the dollar today, these levels would seem attractive to sell forward dollars. 

Premiums also fell because the Reserve Bank of India did not hike the cash reserve ratio at its monetary policy statement Wednesday, contrary to the market's expectation, dealers said. 

The monetary policy committee raised the repo rate by 50 basis points to 4.90%, in line with market expectation and said that it "remains focused on the withdrawal of accommodation".  (Srijonee Bhattacharjee)

India Rupee: In tight range; RBI continues to sell dollars

NEW DELHI - The rupee remained in a tight range against the dollar as losses incurred through oil marketing companies' dollar purchases were restricted because of persistent dollar sales on behalf of the Reserve Bank of India, dealers said. 

Some state-owned banks sold dollars on behalf of the central bank that wanted to prevent the rupee from depreciating below the support level of 77.80 a dollar, dealers said. 

Crude oil prices were above the $123 a barrel mark due to robust demand in the world's top consumer US. Demand is also expected to rebound in China as COVID-19 curbs across major cities are relaxed.

At 1135 IST, the August contract of Brent crude oil on the Intercontinental Exchange was at $123.70 a barrel against the previous close of $123.58. 

So far today, the rupee has moved in a tight range of 5 paise.

Dealers have now pegged immediate key technical support for the rupee at 77.80 a dollar.

For the rest of the day, the Indian unit is seen in the range of 77.6000-77.9000 a dollar.  (Pratiksha)

 India Rupee - Asia FX: Down as surge in US yields, crude weighs

MUMBAI – Most Asian currencies rose against the US dollar today as a rise in US treasury yields and crude oil prices weighed on investor sentiment.

Brent Crude futures topped $124 per barrel, raising concern about inflation persisting at higher levels for a longer time. Rising US bond yields also dented appetite for riskier emerging market assets.

Globally, investors remained cautious ahead of release of the US consumer price data on Friday. The report is expected to show that inflation remained high in May.

Focus is also on the European Central Bank’s policy meeting today, where it is expected to confirm its intention to raise interest rates in July.

Asian currencies fell 0.1-0.4%, with the Indonesian rupiah slipping 0.4%, the most among its peers. (Richard Fargose)

 India Rupee:Falls as crude surges; exporters' dlr sales limit losses

NEW DELHI – The rupee was down against the dollar today as crude oil prices surged due to signs of a rise in demand in the US and China amid growing concern about weak supply from several countries, including Iran. 

A rise in oil prices increases India's import bill and subsequently dampens sentiment for the rupee.

At 0940 IST, the August contract of Brent crude oil on the Intercontinental Exchange was at $124.00 a barrel against the previous close of $123.58 a bbl. 

The losses in domestic share indices also dampened sentiment for the Indian unit, dealers said. At 0940 IST, the Nifty 50 and the Sensex were down 0.3% each.

Meanwhile, some banks stepped in to sell the greenback on behalf of exporters, who wanted to take advantage of higher dollar/rupee levels of 77.75-77.77 a dollar, which limited further losses in the Indian unit, dealers said.

"I think the technical support of 77.80 a dollar will finally be breached today," a dealer with a state-owned bank said. "The central bank's support will be there but the extent of it will be monitored."

Today, the Indian rupee opened at a record opening low of 77.7500 a dollar. 

Dealers have now pegged immediate key technical support for the rupee at 77.80 a dollar.

For the rest of the day, the Indian unit is seen within the range of 77.6000-77.9000 a dollar.  (Pratiksha)

India Rupee: Expected range for rupee - Jun 9

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 and Richard Fargose)   

End

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

Edited by Avishek Dutta

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