Informist, Friday, Dec 3, 2021

By Arushi Jain and Pratiksha

MUMBAI - The rupee ended sharply lower against the dollar today because the US unit remained firm globally due to investors' concerns over the spread of the Omicron variant of COVID-19 and its impact on the economy, said dealers.

The rupee closed at 75.1625 a dollar against 74.9950 a dollar at 1530 IST on Thursday. The local currency had opened largely steady at 74.9800 a dollar today.

US President Joe Biden's administration is expected to tighten travel rules to and within the country. Meanwhile, countries such as France, Germany, Indonesia, South Korea, Australia, the UK, Canada and Japan also decided to tighten restrictions for international travellers and unvaccinated citizens. 

According to the World Health Organization, at least 23 countries from five continents have reported cases of Omicron so far. India also detected its first two cases of the Omicron variant in Karnataka on Thursday.

Sentiment for the Indian unit also weakened due to a sharp fall in domestic benchmark equity indices, dealers said. The Nifty 50 and the Sensex ended down nearly 1.2% and 1.3%, respectively.

The dollar gained further in European trade after rising on Thursday due to upbeat jobs data in the US, which dampened sentiment for emerging market assets, including the Indian rupee, said dealers.

Data showed initial claims for unemployment benefits in the US rose less than expected, up 28,000 to a seasonally adjusted 222,000 for the week ended Nov 27.

At 1612 IST, the dollar index, which measures the strength in the US currency against a basket of six major currencies, was at 96.17 compared with 96.16 on Thursday. It was at 96.03 on Wednesday.

The dollar index rose to as much as 96.32 earlier in the day.

Noting this, some banks stepped in to place fresh bets in favour of the US currency on behalf of investors, which further weighed on the Indian rupee, dealers said.

"There seems to be some (dollar) positioning ahead of the non-farm payroll data," said a dealer with a private bank. "There is a general atmosphere of discord (for rupee) amid the rising number of Omicron cases and the falling equity markets."

The rupee fell to the day's low of 75.1750 a dollar today.

Dealers said trade volumes were lower than usual today because investors worldwide were cautious ahead of the crucial non-farm payroll report in the US, due to be released later today.

The US economy is expected to have added 550,000 new jobs in November, while the unemployment rate is seen contracting to 4.5% from 4.6% in the previous month, according to a Reuters poll.

Investors also await cues on when the US Federal Reserve will fasten its pace of tapering asset purchases amid improving labour market conditions, said dealers.

Separately, prices of Brent crude oil rose today after the Organization of the Petroleum Exporting Countries decided to keep its oil production policy unchanged and only gradually add another 400,000 barrels per day in the market from January. Reports said the cartel's decision suggests that it expects global demand to remain resilient during winters.

At 1612 IST, the February contract of Brent crude on the Intercontinental Exchange was at $71.47 per barrel compared with $69.67 per bbl at the previous close.

Market participants also await speeches of European Central Bank President Christine Lagarde and Chief Economist Philip Lane later today for any comments on the impact of Omicron on ECB's policy outlook and inflation.

FORWARDS

The premium on the dollar/rupee forwards contract ended down due to dollar sales by foreign banks for forward delivery on behalf of exporters, dealers said.

On an annualised basis, premium on the one-year, exact-period dollar/rupee contract was at 4.69% as against 4.74% on Thursday. The premium was at 352.65 paise compared with 355.20 paise on Thursday.

OUTLOOK

On Monday, the rupee may track overnight movement in the dollar index after the release of key non-farm payroll data in the US, later today.

The local currency may take cues from movement in the prices of Brent crude oil and from global developments related to the spread of the Omicron variant, said dealers.

During the day, the rupee is seen at 74.8000-75.2000 a dollar.

India Rupee - World FX: Euro steady ahead of ECB Lagarde's speech

NEW DELHI – The euro was largely steady against the dollar today ahead of the speeches of European Central Bank President Christine Lagarde and Chief Economist Philip Lane later today.

Market participants will keenly look for any comments on the impact of Omicron on the ECB's policy outlook and inflation.

The pound sterling was down 0.2% against the dollar in view of rising number of cases of the COVID-19 variant in UK.

UK reported 32 confirmed cases of the Omicron strain as of Thursday. Prime Minister Boris Johnson on Wednesday issued a call to ramp up the COVID-19 booster drive to fend off its spread.

The dollar edged higher against most major currencies as traders took positions ahead of key US jobs and nonfarm payroll data later today that could clear the path for an earlier rate hike by the Federal Reserve.

The dollar received a boost after several Federal Reserve officials this week batted for early winding up of its bond-buying programme to tackle stubborn inflation.

At 1530 IST, the dollar index, which measures the strength of the US currency against a basket of six major currencies, was at 96.26 compared with 96.16 on Thursday. It was at 96.03 on Wednesday. (Pratiksha)

India Rupee: Largely steady amid caution ahead of US jobs report

MUMBAI - The rupee was largely steady against the dollar today because investors worldwide remained on the sidelines ahead of the crucial jobs report in the US, due to be released later today, said dealers.

The US economy is expected to have added 550,000 new jobs in November, while the unemployment rate is seen contracting to 4.5% from 4.6% in the previous month.

Market participants await the US nonfarm payroll report for cues on economic recovery and clarity on how quickly the US Federal Reserve will taper its asset purchases amid improving labour market conditions, said dealers.  

Investors worldwide also evaluated the impact of the Omicron variant of COVID-19 on the economy after several countries imposed stricter restrictions, said dealers.

Sentiment for the Indian unit weakened after the country detected its first two cases of the Omicron variant in Karnataka on Thursday, said dealers.

Further, prices of Brent crude oil rose marginally on Thursday as the Organization of the Petroleum Exporting Countries decided to keep its oil production policy unchanged and gradually add another 400,000 barrels per day in the market from January.

Reports said the cartel's decision suggests that it expects global demand to remain resilient during winters.

At 1040 IST, the February contract of Brent crude on the Intercontinental Exchange was at $70.92 per bbl compared with $69.67 per bbl at the previous close.

"Rupee will track Asian peers in today’s session and stay under pressure, it will however take solace from the fact that oil prices remain low after OPEC and its allies unexpectedly decided to increase the monthly oil output increases despite the uncertainty regarding the latest variant of coronavirus," said a dealer with a brokerage firm.

The Indian unit is seen in a range of 74.8500-75.1000 a dollar during the day.  (Arushi Jain)

India Rupee: Expected range for rupee - Dec 3

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)

India Rupee - Asia FX: Mixed; Omicron fears, Fed taper talks weigh

NEW DELHI – Asian currencies were mixed against the dollar in early trade today as fears over the Omicron variant of COVID-19 persist with more and more countries reporting cases of the highly mutated variant. 

Cases of Omicron variant have been detected in 23 countries so far including the US, the UK, India and South Korea.

The US and Germany joined countries around the globe imposing stricter COVID-19 restrictions as the Omicron variant rattled markets. Germany decided to tighten restrictions for those unvaccinated against COVID-19.

Meanwhile, more US Federal Reserve officials talked about quicker tapering of Fed's asset purchases, weighing on investors' sentiments.

Federal Reserve Bank of Atlanta President Raphael Bostic on Thursday said that it would be appropriate to conclude the tapering of the central bank's bond-buying programme by the end of March.

At another event, San Francisco Fed President Mary Daly said it might be time to start devising a plan to raise interest rates to address above-target inflation.

The Korean won was down nearly 0.4% against the dollar in Asian trade today after local COVID-19 numbers rose to a new high this week.

South Korea today reported 4,944 new COVID-19 cases and also strengthened distancing measures after six Omicron variant cases were confirmed in the country.

The Malaysian ringgit was up against the dollar, nearly 0.1%. The Philippine peso was up 0.07% against the greenback. (Shubham Rana)

End

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

Edited by Vandana Hingorani

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