Informist, Monday, Oct 9, 2023

By Ananya Chaudhuri

MUMBAI – After trading in a narrow range throughout the day, the rupee ended largely steady against the dollar as banks sold the greenback likely on behalf of the Reserve Bank of India, which offset the impact of banks' dollar purchases for oil marketing companies and other importers, dealers said.

Today, the Indian currency settled at 83.2625 against the US currency, a whisker away from the record low level of 83.29 a dollar on Oct 20, 2022. The rupee settled at 83.2500 a dollar on Friday. The rupee moved in a tight range of 7 paise throughout the day against the greenback.

The rupee started the day largely steady at 83.2200 a dollar despite a rise in crude oil prices as banks sold the US currency in the offshore non-deliverable forwards market likely for the central bank. 

Before opening, the rupee recovered to the 83.19-83.20 a dollar level in the offshore market from the low of 83.30 a dollar. Later, it went on to open steady against the dollar.

A surge of 4% in crude oil prices in the wake of the Hamas-Israel conflict propelled oil marketing companies to stock up the commodity, which also exerted pressure on the rupee. 

An attack by Hamas fighters on Israel led the latter to declare war during the weekend. Over 1,000 people died this weekend, with more than 600 Israelis killed in the Hamas assault and more than 400 Palestinians dead as Israel retaliated with airstrikes on the Gaza Strip, according to news reports.

A rise in crude oil prices raises India's import bills, subsequently weighing on the Indian currency. At 1713 IST, the December contract of Brent crude oil on the Intercontinental Exchange was at $87.39 a barrel, as against $84.58 a bbl on Friday. It was at $84.07 a bbl on Thursday.

Shortly after opening, the Indian currency rose to the day's high of 83.2075 against the US currency as banks rushed to sell dollars in the domestic spot currency market, likely on behalf of the Reserve Bank of India, dealers said.

However, banks rushed to purchase the greenback on behalf of the oil marketing companies who expected oil prices to rise further due to heightened geopolitical tension between Israel and Gaza. 

Further, heightened geopolitical tension prompted investors to move from riskier assets like emerging market currencies, which also weighed on the Indian unit, dealers said.  

"The public sector intervention has been going on for quite awhile; 83.28 (a dollar) level seems like heavily protected. As of this point, there's so many geopolitical tension are coming in. They will keep an eye on the situation. We're expecting it (rupee) to remain range bound," a dealer at a big state-owned bank said. 

Dealers said volumes in the currency market were muted as financial markets in the US were closed on account of Columbus Day holiday. 

A sharp fall in domestic share indices also weighed on rupee. Today, both the Nifty 50 and the Sensex ended 0.7% down. 

FORWARDS

Premiums on the one-year dollar/rupee forwards fell, tracking a rise in US Treasury yields, dealers said.

The yield on the benchmark 10-year US Treasury note rose on Friday after data showed new jobs in the US grew more than expected.

Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.

The premium on the one-year, exact-period dollar/rupee forward contract was at 149.94 paise, against 152.61 paise at the close on Friday. On an annualised basis, the premium was at 1.80%, against its previous close of 1.83%. 

OUTLOOK

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

"Tomorrow the rupee is expected to remain in the range of 83.20 to 83.40 with biddish dollar expectations as dollar index and US yields continue to rise," said Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors LLP.

Market participants also await the release of the US Federal Open Market Committee's September policy meeting minutes on Wednesday, and US CPI print for September on Thursday.  

Dealers have pegged key technical support for the rupee at 83.30 a dollar, breaking which can push the rupee to 83.50 a dollar. During the day, the rupee is seen in the range of 83.00-83.50 a dollar.

India Rupee - World FX: Dollar index rises amid geopoltical crisis

MUMBAI – The US dollar strengthened against almost all major currencies as investors moved towards safe-haven assets in the wake of the geopolitical turmoil involving Israel and Gaza.

An attack by Hamas fighters on Israel led the latter to declare war during the weekend. Over 1,000 people died this weekend, with more than 600 Israelis killed in the Hamas assault and more than 400 Palestinians killed as Israel retaliated with airstrikes on the Gaza Strip, according to news reports.

At 1643 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 106.52, as against 106.10 on Friday. It was at 106.34 on Thursday.

The pound sterling fell 0.6%, most among its peers, against the greenback on the backdrop of a weak economic growth outlook in the UK amid expectation the US Federal Reserve will hike interest rates again while the Bank of England's path is more uncertain.

The euro fell 0.5%, amid weak data from Germany, Europe's largest economy. Germany's industrial production fell to 0.2% in August from the previous month, compared with 0.1% projected in a Reuters' poll.  

Meanwhile, European Central Bank President showed confidence in the central bank's ability to bring down the headline and core inflation, according to media reports. The momentum in inflation is cooling much faster in the European zone, while the US economy has been surprisingly strong.

According to central bank forecasts, growth will be more sluggish in Europe over the next year, which has exerted pressure on the European currency.

The Australian dollar fell 0.4% against the greenback.

The Japanese yen stayed resilient and rose 0.1% against the greenback due to the Israel-Gaza conflict as the Yen is considered a safe-haven currency for investors.

Furthermore, the former top currency diplomat Naoyuki Shinohara told Reuters that Japan was unlikely to intervene in the forex market to reverse the yen's downtrend against the greenback.

The Canadian dollar remained flat against the dollar. Canada’s major exports to the US is crude oil, which became expensive after the last weekend's crisis involving Israel and Gaza. (Vaishali Tyagi and Sourabh Kumar)

India Rupee: In thin band as dlr sales likely for RBI offset demand 

MUMBAI – The rupee traded in a narrow range of 6 paise against the dollar as banks sold the greenback likely on behalf of the Reserve Bank of India, which offset dollar purchases by banks for importers, said dealers.

Dealers said banks sold the greenback on behalf of the RBI to protect the Indian currency from breaching the record low level of 83.29 against the dollar.

A surge of 4% in crude oil prices in the wake of the Hamas-Israel conflict propelled oil marketing companies to stock up the commodity, which also exerted pressure on the rupee. "That (rising crude prices) obviously has a bearing on dollar/rupee, but it's (rupee's) in the same range which we have seen in the last two weeks," said a dealer at a private bank. 

A rise in crude oil prices raises India's import bills, subsequently weighing on the Indian currency. At 1342 IST, the December contract of Brent crude oil on the Intercontinental Exchange was at $86.53 a barrel, as against $84.58 a bbl on Friday. It was at $84.07 a bbl on Thursday.

Further, the dollar index rose after investors moved towards safe-haven assets following the Israel-Gaza conflict, which weighed on the Indian rupee. 

Volumes in the currency market remained muted as US financial markets were closed on account of Columbus Day holiday.

Now market participants await the US CPI data for September, scheduled for release on Thursday, for forward guidance about the US Fed's monetary policy moving ahead. 

At 1342 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 106.58, as against 106.10 on Friday. It was at 106.34 on Thursday.

Dealers see immediate technical support for the rupee at 83.30 a dollar. During the day, the rupee is seen in the range of 83.00-83.30 a dollar. (Sourabh Kumar and Vaishali Tyagi)

India Rupee - Asia FX: Most dn as dlr index up on safe-haven demand

MUMBAI – Most Asian currencies were down against the dollar as the dollar index rose after investors moved towards safe-haven assets following the Israel-Gaza conflict. 

Moreover, strong data from the US labor department showed US non-farm payrolls rose by 336,000 last month against a 170,000 increase projected by a Reuters poll. According to the CME FedWatch Tool, expectations of market participants that the US Federal Reserve's rate hike by 25 basis points in the December meeting, stood at 42.04%.

Now market participants will closely monitor the US CPI data for September, scheduled for release on Thursday, for forward guidance about the US Fed's monetary policy moving ahead.

At 1045 IST, the dollar index, which measures the strength in the greenback against a basket of six currencies, was at 106.34, as against 106.10 on Friday. It was at 106.34 on Thursday.

Moreover, in the backdrop of an evolving conflict between Israel and Gaza, investors' demand for safe haven assets like dollars saw an uptick which weighed on riskier asset like Asian currencies. 

The Thai baht slipped 0.6%, the most against the greenback, as the dollar is seen as a safe haven currency. Furthermore, the Thai currency weakened against the dollar amid controversy over the Thai government’s plan to stimulate the economy with a cash handout policy of $15 bln.

The Indonesian rupiah weakened 0.4% against the US currency as the strong dollar, due to the Israel conflict, weighed on the rupiah. The Bank Indonesia will likely keep the interest rate steady to protect the Indonesian currency from global market volatility, said the governor Perry Warjiyo in an interview with Bloomberg on Friday. The comment holds importance as the global market faces uncertainty amid the regional expansion of Israel and Gaza conflict. 

The Malaysian ringgit was also down 0.2% against the greenback.

The Philippine peso fell 0.4% against the greenback despite the country clocking an inflation rate of 6.1% on year in September from 5.3% a month ago. The headline inflation was at a three-month-high, matching the higher end of the central bank of Philippines' 5.3-6.1% inflation rate forecast for the month. End (Sourabh Kumar and Vaishali Tyagi)

India Rupee: Largely steady on bks' dlr sales in NDF likely for RBI

MUMBAI – The rupee was largely steady against the dollar as banks sold the greenback in the offshore non-deliverable forwards market likely on behalf of the Reserve Bank of India, dealers said. 

During pre-open, the rupee was around 83.17-83.18 against a dollar in the offshore market but it went on and open around 83.2200 a dollar. 

Dealers said banks sold the greenback on behalf of the Reserve Bank of India to protect the Indian currency from breaching the record low level of 83.29 against the dollar. 

Banks bought the greenback on behalf of oil importers, weighing on the Indian currency, dealers said. 

Crude oil futures prices rose as a surprise Hamas attack on Israel fuelled fears about global oil supply. An attack by Hamas fighters on Israel led the latter to declare war during the weekend. 

Over 1,000 people died this weekend, with more than 600 Israelis killed in the Hamas assault and more than 400 Palestinians dead as Israel retaliated with airstrikes on the Gaza Strip, according to news reports.

At 0937 IST, the December contract of Brent crude oil on the Intercontinental Exchange was at $87.69 a barrel, as against $84.58 a bbl on Friday. It was at $84.07 a bbl on Thursday.

"Actually, at lower levels (of rupee), RBI was there. They won't allow it (rupee) to make it record low (against the dollar)," a dealer at a private bank said. "Oil bids have increased also. We're expecting it (rupee) move between 83.18-83.27 (a dollar) level."

Losses in domestic share prices also weighed on the rupee, dealers said. At 0937 IST, both the benchmark Nifty 50 and Sensex were 0.6% down, respectively.

Dealers see immediate technical support for the rupee at 83.30 a dollar. During the day, the rupee is seen in the range of 83.00-83.40 a dollar. (Ananya Chaudhuri)

India Rupee: Expected range for rupee - Oct 9

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

(Vaishali Tyagi)

End

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

Edited by Vidhi Verma

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