Informist, Friday, Jul 8, 2022

By Pratiksha and Srijonee Bhattacharjee

NEW DELHI – After rising for two consecutive days, the rupee fell against the greenback today as the dollar index hit a near two-decade high during European trade, dealers said.

The Indian currency was weak throughout the day and moved in a narrow range of 12 paise, before it closed at 79.2500 a dollar, down 0.1% from Thursday's closing level of 79.1750 a dollar.

The dollar index, which measures the strength of the US currency against a basket of six major currencies, rose to 107.79, its highest level since October 2002.

The dollar index rose ahead of US jobs data that will be released later in the day. The data may give cues on whether the US Federal Reserve will continue to aggressively raise interest rates at its next meeting on Jul 26-27 to curb rising inflation.

The US jobs data is expected to show that employers added 250,000 jobs in June, compared to 390,000 in May.

At 1630 IST, the dollar index was at 107.22 compared with 107.13 on Thursday. It was at 107.10 on Wednesday.

The Indian currency started the day slightly lower at 79.2000 a dollar, as prices of crude oil rose due to tight supply even though worries about a potential global recession persisted, dealers said.

At 1630 IST, the September contract of Brent crude oil on the Intercontinental Exchange was at $104.55 a barrel against the previous close of $104.65 a bbl. It was at $100.69 a bbl on Wednesday.

The rupee moved in a narrow range of 79.22-79.26 a dollar for almost four hours, after which it fell and breached the crucial support of 79.30 a dollar.

The unit fell to the day's low of 79.3150 a dollar as the dollar index strengthened in European trade, dealers said.

However, the volume in the currency market was subdued as traders were cautious and refrained from placing fresh bets ahead of the US jobs data for June.

"The volumes were dull. Since it was a very volatile week for the market, traders avoided taking long positions before the weekend," said a dealer with a state-owned bank. "There was also caution due to the US data."

The Reserve Bank of India is said to have stepped in to sell dollars in the last 30 minutes of trade, which saw the rupee recover almost six paise and close at 79.2500 a dollar, dealers said. 

Dealers said the RBI sold dollars to stop the rupee from breaching the immediate crucial support of 79.30 a dollar. The central bank also wanted to prevent the rupee from hitting a fresh record low, they said. The Indian currency hit a record low of 79.3800 a dollar on Tuesday.

The rupee also got support from rise in domestic equities, dealers said. The Nifty 50 and the Sensex ended 0.5% and 0.6% higher, respectively.

FORWARDS

Premiums on dollar/rupee forwards were marginally lower because exporters sold dollars for forward delivery, noting the fall of the rupee earlier in the day, dealers said.

Premium on the one-year dollar/rupee contract was at 239.80 paise, against 240.65 paise on Thursday. On an annualised basis, the premium was at 3.02% as against the previous close of 3.04%.  

Exporters and banks sold the greenback for forward delivery owing to rise in the dollar/rupee rate, which is a component of the premium received.

OUTLOOK

On Monday, the rupee will take cues from overnight movement in the dollar index after US jobs data is detailed later today, dealers said.

The local unit will also take cues from movement in Brent crude oil prices.

"The rupee's trajectory next week will rely a lot on the US jobs and inflation data," a dealer with a private bank said.

According to dealers, the RBI will continue to intervene through dollar sales to protect the rupee from depreciating sharply against the dollar.

Dealers now see strong key technical support for the rupee at 79.50 a dollar.

During the day, the rupee is seen in the range of 79.00-79.50 a dollar.

 India Rupee - World FX: Yen up on safe-haven demand; sterling down

MUMBAI – The Japanese yen gained against most major currencies due to safe-haven demand after former prime minister Shinzo Abe was shot at while campaigning for the upcoming elections.

The yen is widely considered a safe-haven currency, which appreciates when global investors’ behaviour becomes risk averse or economic fundamentals are uncertain.

The pound sterling slipped 0.5% today after rising on Thursday as market continues to assess impact of UK Prime Minister Boris Johnson stepping down.

Meanwhile, the dollar index rose to a fresh near two-decade high today ahead of the release of the key US jobs data later today, which will help investors gauge whether the US Federal Reserve will continue to aggressively hike interest rates when policymakers next meet on Jul 26-27.

At 1540 IST, the index was at 107.40 compared with 107.13 on Thursday. (Richard Fargose)

India Rupee: Premiums tad dn; exporters sell fwd dlrs on rupee's fall

MUMBAI – Premiums on dollar/rupee forwards were a tad lower because exporters sold dollars for forward delivery, noting the fall in the rupee earlier today, dealers said.

The premium on the one-year dollar/rupee contract was at 238.70 paise, against 240.65 paise on Thursday. On an annualised basis, the premium was at 3.01% as against 3.04% at the previous close.  

Exporters and banks sold the greenback for forward delivery, owing to a rise in the dollar/rupee rate, which is a component of the premium received.

The rupee fell to a low of 79.3150 a dollar because the dollar index rose to a near 20-year high.  (Srijonee Bhattacharjee)     

India Rupee: Falls more as dollar index hits fresh near 20-year high

NEW DELHI – The rupee fell further against the greenback as the dollar index rose to a fresh near two-decade high during European trade, dealers said. 

The dollar index strengthened ahead of the release of the key US jobs data later today, which will help investors gauge whether the US Federal Reserve will continue to aggressively hike interest rates when policymakers next meet on Jul 26-27.

The dollar index, which measures the strength in the US currency against a basket of six major currencies, rose to 107.79 today, its highest level since October 2002. 

At 1330 IST, the index, was at 107.66 compared with 107.13 on Thursday. It was at 107.10 on Wednesday.

For the rest of the day, the Indian unit is seen at 79.0000-79.4000 a dollar.  (Pratiksha)

India Rupee - Asia FX: Most steady on caution ahead of US jobs data

NEW DELHI – Most Asian currencies were steady against the US dollar as investors remained cautious ahead of the release of the US jobs report for June, which is due later today.

The key data will help investors gauge whether the US Federal Reserve will continue to aggressively hike interest rates when policymakers meet next on Jul 26-27. 

Investors widely expect the economic data to weaken due to the rate hikes undertaken by the Fed. They expect the data to show that US employers added 250,000 jobs in June compared with 390,000 in May.

While the rise in local equity markets lent support to Asian currencies today, reports of former Japanese prime minister Shinzo Abe being shot at weighed on the risk sentiment.

The South Korean won and the Indonesian rupiah were up 0.1%, while the Taiwanese dollar and Philippines peso fell 0.1-0.2% against the dollar. (Richard Fargose)

India Rupee: Falls as crude rises; gains in local shrs limit losses

NEW DELHI – The rupee fell against the dollar today as prices of crude oil settled higher on Thursday after investors turned their focus towards tight supply despite persisting worries of a potential global recession, dealers said. 

A rise in crude oil prices increases India's import bill and weighs on the rupee, given that India is the third-largest oil importer in the world.

At 0940 IST, the September contract of Brent crude oil on the Intercontinental Exchange was at $104.77 a barrel against the previous close of $104.65 a bbl. It was at $100.69 a bbl on Wednesday.

Meanwhile, gains in domestic equity indices restricted losses in the rupee, according to dealers. At 0940 IST, the Nifty 50 and the Sensex rose 0.6% and 0.5%, respectively.

Investors now await the release of the US jobs report for June, due later today, dealers said. The key US data will help investors gauge whether the US Federal Reserve will continue to aggressively hike interest rates when policymakers next meet on Jul 26-27.

"The 79.30 (a dollar) level will be closely watched," a dealer with a state-owned bank said. "If it breaches (the 79.30 level), the 79.50 (a dollar) level might be touched."

Dealers have pegged the immediate technical support for the rupee at 79.30 a dollar.

For the rest of the day, the Indian unit is seen at 78.9000-79.4000 a dollar.  (Pratiksha)

India Rupee: Expected range for rupee - Jul 8

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 Ashish Shirke

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