Informist, Friday, Oct 22, 2021

By Arushi Jain

MUMBAI – The rupee fell against the dollar today because foreign banks purchased the US unit towards the end of the session, likely for outflows from Indian equities, dealers said.

A fall in local benchmark equity indices also dampened sentiment for the Indian currency, dealers added. 

The Nifty 50 and the Sensex ended down nearly 0.4% and 0.2%, respectively.

After moving in a range of nearly 25 paise, the rupee closed at 74.8900 a dollar today compared with 74.8600 at 1530 IST on Thursday. 

Moreover, sentiment for the local unit was dented after prices of Brent crude oil, which had fallen to the day's low of $83.82 a barrel, reversed losses and touched a high of $85.30 per bbl. 

Noting this, major state-owned banks were said to have purchased dollars on behalf of oil marketing companies, said dealers.

Prices of crude oil had plunged on Thursday after the US National Oceanic and Atmospheric Authority forecast a mild winter in the US, hurting the outlook for oil demand in the coming months. 

At 1640 IST, the December contract of Brent crude on the Intercontinental Exchange was at $85.27 per barrel, compared with $84.61 a bbl at close on Thursday.

The local unit fell to the day's low of 74.9350 a dollar today.

On the flip side, for most of the trade session, the rupee traded higher against the dollar as the US unit fell in European trade, said dealers.

The dollar fell after risk sentiment improved and as investors expected major central banks to tighten monetary policy ahead of the US Federal Reserve after economic recovery gained momentum during a period of heightened inflation.

Meanwhile, comments by several Fed officials in recent days have sought to calm the market on imminent rate hikes amid rising US inflation.

At 1640 IST, the dollar index--a measure of strength in the greenback against a basket of six major currencies--was at 93.64 compared with 93.77 on Thursday. It was at 93.56 on Wednesday.

The dollar had recovered earlier losses against major currencies in early trade today on the back of upbeat jobs and housing data in the US.

Initial claims for state unemployment benefits dropped to a 19-month low by 6,000 to a seasonally adjusted 290,000 for the week ended Oct 16, the lowest since the middle of March 2020.

However, the US currency could not sustain gains in intraday trade, said dealers.

"Dollar index needs validation from the 94.00 round figure for conviction, a break of which will challenge the monthly peak of 94.56 while 93.40/50 zone remains an immediate support," said a dealer with a foreign bank.

Dealers said the Indian unit also tracked gains in the Chinese yuan early in the session. The yuan rose after Chinese property developer Evergrande made an overdue interest payment to bondholders on Thursday, potentially mitigating the fallout from its impending debt defaults.

The Chinese government's statement that it would loosen control on the property market also contributed to the gains in Asian stocks.

The rupee had risen to the day's high of 74.6900 a dollar today as private and foreign banks sold dollars for overseas investments into Indian companies raising funds through various means, dealers said.

A large private bank, a US-based bank and a UK-based bank were among the major sellers of the dollars today, said dealers.

"Exporters can wait for a move (in rupee) towards 75.25/$1 for longer-term hedges whereas importers can book exposures till year-end at current (dollar/rupee) levels," said a dealer with a brokerage.

FORWARDS

The premium on dollar/rupee forwards contract ended higher because some banks purchased dollars for forward delivery on behalf of importers, dealers said.

On an annualised basis, premium on the one-year, exact-period dollar/rupee contract was at 4.59% against 4.57% on Thursday. The premium was at 342.90 paise, compared with 342.40 paise on Thursday.

OUTLOOK

On Monday, the rupee will take opening cues from overnight movement in the dollar index and US bond yields after the release of manufacturing and services purchasing managers' index data in the US, later today.

The rupee may also track movement in the Chinese yuan and Brent crude oil prices, said dealers.

Dealers have pegged immediate key technical support for the rupee at 75.00 a dollar.

The rupee is seen in the 74.6000-75.2000 a dollar range during the day.

India Rupee - World FX:Most up; Evergrande news buoys risk sentiment

NEW DELHI – Most major currencies rose against the dollar in European trade today as overdue interest payment by debt-laden Chinese property developer Evergrande on Thursday potentially mitigated the fallout from the company's massive impending debt defaults, and improved investors' risk sentiment.

The pound sterling and the Euro rose around 0.1% as recent data suggested that inflation was set to increase in both the UK and the Eurozone, which may lead to sooner-than-expected monetary policy tightening by the central banks. 

The gains were, however, limited due to a rise in US Treasury yields.

The dollar had surged in early Asian trade after strong economic data in the US paved way for the Federal Reserve to start tapering its asset acquisition from November. 

At 1535 IST, the dollar index, which measures the strength of the US currency against six other major units, was at 93.63 compared with 93.77 on Thursday. It was at 93.56 on Wednesday.

Commodity-linked currencies such as the Australian and the New Zealand dollar gained the most today, each rising 0.4%.  (Shubham Rana)

India Rupee: Rises on gains in local, Asian equities, FX inflows

MUMBAI – The rupee rose against the dollar today tracking a sharp rise in domestic and Asian benchmark equity indices, dealers said.

At 1045 IST, The Nifty 50 and the Sensex were up nearly 0.5% and 0.6%, respectively.

Asian equity indices rose in early trade as Chinese property developer Evergrande made an overdue interest payment on Thursday, potentially mitigating the fallout from its impending debt defaults.

The Chinese government's statement that it would loosen control on the property market also contributed to the gains in Asian stocks.

The local unit also gained because private and foreign banks sold dollars for overseas investments into Indian companies raising funds through various means, dealers added.

A large private bank was said to have sold dollars today, according to dealers.

On the flip side, the sentiment for the rupee was weighed as dollar recovered earlier losses against major currencies, boosted by upbeat jobs and housing data in the US, said dealers.

Jobless claims dropped to a 19-month low by 6,000 to a seasonally adjusted 290,000 for the week ended Oct 16, the lowest since the middle of March 2020. US home sales also surged to an eight-month high in September.

At 1045 IST, the dollar index--a measure of strength in the greenback against a basket of six major currencies--was at 93.73 compared with 93.77 on Thursday. It was at 93.56 on Wednesday.

"As long as the rupee does not appreciate beyond 74.50/$1 levels, positional traders are expected to continue to place bets in favour of the dollar," said a dealer with a state-owned bank. "If 74.50/$1 crosses, then we will see if there's a change in view."

The Indian unit is expected to move in a range of 74.6500-75.0000 a dollar during the day. (Arushi Jain)

India Rupee - Asia FX: Most down as dlr firm; fall in crude supports

NEW DELHI – Most Asian currencies were slightly lower in early trade today as dollar was firm after upbeat US economic data, but losses were limited due to a fall in the price of crude oil.

The US dollar index reversed its weakness from earlier this week, as weekly jobless claims in the world's largest economy fell to a 19-month low, indicating that the economy had recovered after weaker labour market readings in September following a fresh surge of COVID-19 infections.

The dollar also strengthened after yield on the 10-year benchmark US Treasury note rose to a fresh five-month high due to concerns that the US Federal Reserve would ramp up its policy tightening. 

At 0920 IST, the dollar index, which measures the US currency against six other major units, was at 93.72 compared with 93.77 on Thursday. It was 93.56 on Wednesday.  

Meanwhile, the Thai baht rose at 0.1% after the government on Thursday allowed quarantine-free entry to travellers from 46 countries and territories, including the US, China and the UK, from Nov 1 to boost tourist inflows into an economy ravaged by floods and COVID-19. (Pratiksha)

India Rupee: Expected range for rupee - Oct 22

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 Snigdha Kuttikat

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