Informist, Wednesday, Oct 27, 2021

By Arushi Jain

MUMBAI – The rupee fell against the dollar today because the US unit rose in European trade after a slew of better-than-expected economic data in the US strengthened prospects of quicker economic recovery in the world's largest economy, dealers said.

At 1616 IST, the dollar index, which measures strength in the US currency against a basket of six major currencies, was at 93.99 compared with 93.95 on Tuesday. It was at 93.81 on Monday.

After moving in a narrow range of only 15 paise, the rupee closed at 75.0250 a dollar compared with 74.9575 at 1530 IST on Tuesday.

The rupee had opened down at 74.9850 a dollar today on the back of overnight gains in the dollar.

Consumer confidence in the US unexpectedly rose in October as concerns about high inflation eased amid improving labour market prospects. The consumer confidence index increased to 113.8 this month from 109.8 in September. 

US new home sales also surged 14% in September to a six-month high of 800,000 units, beating market expectations of 760,000 units. 

"Better-than-expected economic data from the US has once again underpinned the belief that the US Federal Reserve could start tapering next month," said a dealer with a brokerage.

The local unit then rose in early trade as foreign and private banks stepped in to sell the dollar for overseas investments into Indian companies that plan to raise funds through initial public offerings in the coming days, dealers said.

The 6.3-bln-rupee offer of FSN E-Commerce Ventures Ltd, the parent company of fashion brand Nykaa, will open on Thursday and close on Monday.

Various other Indian companies such as Policybazaar, Paytm, Anand Rathi Wealth are also set to launch their IPOs.

Amid thin trade, the Indian rupee touched the day's high of 74.8950 a dollar today.

However, during the day, the rupee started to weaken as dollar sales by banks for foreign fund inflows subsided, according to dealers. 

The rupee fell also due to a fall in local equity indices, said dealers. Both the Nifty 50 and the Sensex ended down by over 0.3% each.

Asian indices had fallen earlier today despite record highs on Wall Street on Tuesday as investors assessed risks to growth from elevated inflation and concerns over China's indebted property sector. Reports said authorities in China have asked property developer Evergrande's founder to use his personal wealth to repay debt.

A sharp fall in Chinese tech stocks due to concerns over higher fuel and raw material costs dampened market sentiment. 

Further, some dealers said that banks also bought dollars on behalf of oil marketing companies at elevated Brent crude oil prices, which further weighed on the rupee.

At 1616 IST, the December contract of Brent crude on the Intercontinental Exchange was at $85.48 per barrel compared with $86.40 a bbl at close on Tuesday.

The Indian unit's day's low was at 75.0450 a dollar.

Investors worldwide now await crucial GDP data in the US and the outcome of major central banks' meetings, including the European Central Bank, Bank of Japan and Bank of Canada, due this week.

Investors are also keenly looking forward to the US Fed's policy meeting next week, where they expect the central bank to taper its massive stimulus programme.

Currency traders are of the view that despite recovery and subsequent strength in the dollar index, the Indian rupee can offset the downward pressure from the lined up IPO-related inflows into the domestic markets. 

FORWARDS

The premium on dollar/rupee forwards contract ended a tad up because banks purchased dollars for forward delivery on behalf of importers and likely the Reserve Bank of India, dealers said.

On an annualised basis, premium on the one-year, exact-period dollar/rupee contract was at 4.65%, against 4.64% on Tuesday. The premium was at 350.00 paise compared with 347.97 paise on Tuesday.

OUTLOOK

On Thursday, the rupee will take opening cues from movement in the dollar index and Brent crude oil prices.

Foreign banks are expected to sell dollars for overseas investors ahead of upcoming IPOs of various Indian companies, which may provide some support to the Indian unit, dealers said.

Dealers have now pegged key technical resistance for the rupee at 74.75 a dollar and support at 75.25 a dollar.

The rupee is seen in a range of 74.8000-75.2000 a dollar on Thursday.

India Rupee - World FX:Sterling down ahead of Sunak's budget address

NEW DELHI – The pound sterling fell 0.2% against the dollar today ahead of a half-yearly update on the public finances and economic outlook of the country from UK finance minister Rishi Sunak later today. 

The pound sterling fell after rallying for the past two days amid investors’ expectation that the Bank of England will hike interest rates next week at the monetary policy meeting. 

The New Zealand dollar was down 0.3% after data showed that a third successive month of record imports has pushed the country to a record trade deficit.

Meanwhile, the Australian dollar rose earlier today following surprisingly strong inflation data that raised the possibility of sooner-than-expected rate hikes, but erased gains as falling crude oil prices weighed on the commodity-linked currency. 

At 1540 IST, the dollar index, which measures the strength of the US currency against six other major units, was at 93.98, compared with 93.95 on Tuesday. It was 93.81 on Monday. (Pratiksha)

India Rupee: Rises on IPO inflows; dollar comes off earlier highs

MUMBAI – The rupee rose against the dollar today because foreign banks sold the US unit for overseas investments into Indian companies raising funds through initial public offerings and other means, dealers said.

Companies like Policybazaar, Paytm and Anand Rathi Wealth are set to launch their IPOs in the coming days, they added.

The 6.3-bln-rupee offer of FSN E-Commerce Ventures Ltd, the parent company of fashion brand Nykaa, will open on Thursday and close on Monday.

Moreover, the rupee found support after the dollar came off its highs touched in early trade today, dealers said.

Dollar had firmed globally after better-than-expected economic data in the US strengthened prospects of quicker economic recovery in the world's largest economy.

Consumer confidence in the US unexpectedly rose in October as concern over high inflation eased amid improving labour market prospects. New home sales in the US also surged 14% in September to a six-month high. 

At 1035 IST, the dollar index, which measures strength in the US currency against a basket of six major currencies, was at 93.89 compared with 93.95 on Tuesday. It was at 93.81 on Monday.

"Strong Asian currencies, yuan appreciation and anticipation of strong FPI (foreign portfolio investor) flows from the upcoming IPOs have been supporting the rupee," said a dealer with a foreign bank.

Investor sentiment for Asian assets improved after China's industrial profits surged 16.3% year-on-year in September, according to data released Thursday by the country's National Bureau of Statistics.

"For dollar/rupee, 74.75/$1 acts as a support while 75.25/$1 a resistance," the dealer said.

The Indian unit is expected to move in a range of 74.7000-75.1000 a dollar during the day.  (Arushi Jain)

India Rupee - Asia FX: Most down on China property sector concerns

NEW DELHI – Most Asian currencies were down in early trade today on investor concerns over China's indebted property sector. 

Reports said authorities in China have asked Evergrande's founder Hui Ka Yan to use his personal wealth to repay debt. Meanwhile, another Chinese real estate developer, Modern Land China Co, defaulted on a bond payment.

The Korean won and the Indonesian rupiah were the worst performing Asian currencies, both down 0.2%, tracking losses in the local equity markets. Crude oil prices also weighed on investor sentiment. 

At 0927 IST, the December contract of Brent crude on the Intercontinental Exchange was at $86.03 per barrel compared with $86.40 a bbl at close on Tuesday.

Bucking the trend, the Taiwan dollar rose 0.1% ahead of GDP data due on Friday. Economists have predicted Taiwanese GDP to grow 4% on year for the Jul-Sep quarter, supported by export growth and healthy global demand for semiconductors. (Shubham Rana)

India Rupee: Expected range for rupee - Oct 27

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 Patricia Hou

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