Informist, Thursday, Aug 11, 2022

By Pratiksha

NEW DELHI – The rupee pared gains and closed lower against the dollar today because of continuous dollar purchases by oil marketing companies and importers, dealers said.

The Indian currency settled at 79.6350 a dollar, off the day's high of 79.2125 a dollar. The unit moved in a broad range of 48 paise throughout the day. 

The rupee had opened about 28 paise stronger at 79.2400 a dollar because the greenback fell globally on Wednesday after a lower-than-expected US inflation print for July, dealers said.

The US labour department on Wednesday said consumer prices in the US rose 8.5% on year in July, down from a four-decade high of 9.1% in June. This gave a boost to expectations of less aggressive interest rate hikes by the US Federal Reserve, dealers said.

The fall in the dollar was the largest single day decline since the start of the pandemic.

At 1630 IST, the dollar index, which measures the strength in the US currency against a basket of six major currencies, was at 104.99 compared with 105.20 on Wednesday. It was at 106.37 on Tuesday.

Three hours into the trade, the domestic unit was dragged to the 79.50-per-dollar level as some foreign banks stepped in to purchase dollars on behalf of importers who wanted to take advantage of the relatively lower dollar/rupee levels, dealers said. 

Moreover, banks purchased dollars on behalf of oil marketing companies, which further weighed on the Indian currency, dealers said.

Prices of crude oil rose after the International Energy Agency raised its oil demand growth forecast for this year.

At 1630 IST, the October contract of Brent crude oil on the Intercontinental Exchange was at $98.19 a bbl as against the previous close of $97.40 a bbl. Prices were at $96.31 a bbl on Tuesday.

"There was considerable demand (of dollars) in the market today," a dealer with a state-owned bank said. "The 79.50 level was being watched for a long time."

The rupee then traded in a narrow range of 79.43-79.48 a dollar for the rest of the session. However, as importers stepped up their dollar purchases during the final thirty minutes of the trade, stop losses were triggered around the 79.50-per-dollar level. 

This aggravated the rupee's downward movement, and it fell to the day's low of 79.69 a dollar, dealers said.

"USDINR spot closed 11 paise higher at 79.63, thanks to demand for dollars from oil marketing companies and importers. There may have been some RBI intervention at lower levels to build reserves. Overall bias remains of a range between 79.00 and 80.00 levels on spot," said Anindya Banerjee, vice-president, currency derivatives & interest rate derivatives at Kotak Securities Ltd.

Meanwhile, a surge in domestic share indices supported sentiment for the rupee. The Nifty 50 and Sensex ended 0.7% and 0.9% higher, respectively.

Dealers said lack of dollar sales on behalf of exporters also weighed on the Indian unit. 

FORWARDS

Premiums on the one-year dollar/rupee forward contract ended higher today, tracking a fall in US Treasury yields, dealers said.

The premium on the one-year dollar/rupee contract was at 244.10 paise as against 239.92 paise at close on Wednesday. On an annualised basis, the premium was at 3.06% against the previous close of 3.01%.

Yields on the 10-year benchmark US Treasury note fell after US CPI inflation for July cooled to 8.5% on year from 9.1% previously, fuelling hopes that the US Federal Reserve may move to a softer pace of rate hikes.

Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries. Less aggressive interest rate hikes by the Fed would ensure the spread with rates in India widens further.

Premiums on dollar/rupee forwards were up also because importers bought dollars for forward delivery, noting the rise in the rupee today, dealers said.

Traders now await India CPI print for July, due Friday, for cues on the trajectory of inflation, after the Reserve Bank of India retained its projection for retail inflation to average 6.7% in 2022-23 (Apr-Mar), dealers said.

OUTLOOK

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

"The pair has entered into a consolidation phase with volatility witnessed in both directions, 80.10 would remain a strong resistance and 78.80 remains strong support for the pair," a brokerage firm said in a note.  

"Until the pair is able to convincingly break on either side, upticks above 79.80 can be taken for selling and dips below 79.00 can be utilised for buying."

During the day, the rupee is seen at 79.30-79.80 a dollar.

India Rupee: Premiums rise tracking fall in US Treasury yields

NEW DELHI – Premiums on the one-year dollar/rupee forward contract rose today tracking a fall in US Treasury yields, dealers said.

The premium on the one-year dollar/rupee contract was at 242.97 paise as against 239.92 paise at close on Wednesday. On an annualised basis, the premium was at 3.06% against the previous close of 3.01%.

Yields on the 10-year benchmark US Treasury note fell after US CPI inflation for July cooled to 8.5% on year from 9.1% previously, fuelling hopes that the US Federal Reserve may move to a softer pace of rate hikes.

Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries. Less aggressive interest rate hikes by the Fed would ensure the spread with rates in India widens further.

Premiums on dollar/rupee forwards were up also because importers bought dollars for forward delivery, noting the rise in the rupee today, dealers said.

"Overall paying was seen across the tenures, but most of the activity was seen in the near term contracts," a dealer with a state-owned bank said.

The premium on the one-month dollar/rupee contract was at 21.94 paise as against 20.01 paise at close on Wednesday. On an annualised basis, the premium was at 3.05% against the previous close of 2.96%.  (Pratiksha)

India Rupee: Off highs as banks buy dollars for oil cos, importers

NEW DELHI – The rupee came off earlier highs against the greenback as foreign banks persistently purchased dollars on behalf of oil marketing companies, dealers said.  

Prices of crude oil fell slightly today after data on Wednesday confirmed that the US crude oil inventories grew substantially more than expected in the past week.

The US crude oil stocks rose by 5.5 mln barrels for the week ended Aug 5, more than the expected increase of 73,000 bbl.

At 1220 IST, the October contract of Brent crude oil on the Intercontinental Exchange was at $97.36 a bbl as against the previous close of $97.40 a bbl. Prices were at $96.31 a bbl on Tuesday.

Moreover, banks purchased dollars on behalf of importers who wanted to take advantage of the relatively lower dollar/rupee levels, which also weighed on the Indian unit, dealers said. 

For the rest of the day, the Indian unit is seen moving in the range of 79.1000-79.6000 a dollar.  (Pratiksha)

India Rupee - Asia FX:Most up as dlr falls globally on ease in US CPI

NEW DELHI – Most Asian currencies rose against the greenback today as the US dollar fell globally on Wednesday after lower-than-expected US inflation print for July.

The US labour department on Wednesday said consumer prices in the US rose 8.5% on year in July, down from a four-decade high of 9.1% in June. This raised expectations of less aggressive interest rate hikes by the US Federal Reserve.

At 1105 IST, the dollar index, which measures strength in the US currency against a basket of six major currencies, was at 105.45 compared with 105.20 on Wednesday. It was at 106.37 on Tuesday.

Gain in local equities also provided support to the Asian units. 

Both the Indonesian rupiah and South Korean won rose 0.5% each, the most among their Asian peers.

Bucking the trend, the Chinese yuan fell 0.3% against the dollar as rising COVID-19 infections and fresh lockdowns added to worries about the country's slow and uneven economic recovery. China reported 2,166 new COVID-19 infections on Wednesday, nearly double the number of cases recorded a day earlier. (Pratiksha)

India Rupee:Rises as dlr down globally on lower-than-expected US CPI

NEW DELHI – The rupee rose sharply against the greenback today as the US dollar fell globally on Wednesday after lower-than-expected US inflation print for July, dealers said.

The US labour department on Wednesday said consumer prices in the US rose 8.5% on year in July, down from a four-decade high of 9.1% in June. This raised expectations of less aggressive interest rate hikes by the US Federal Reserve, dealers said.

At 0930 IST, the dollar index, which measures strength in the US currency against a basket of six major currencies, was at 105.42 compared with 105.20 on Wednesday. It was at 106.37 on Tuesday.

A surge in domestic and Asian share indices also provided support to the Indian unit, dealers said. At 0930 IST, the Nifty 50 and Sensex were up 0.8% and 0.9%, respectively.

"I think the rupee should move in the range of 79.10-79.30 (a dollar) today," a dealer with a state-owned bank said. "Only if significant inflows hit the market, we'll see the rupee moving above the 79 (a dollar) mark."

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 - Aug 11

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)

End

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

Edited by Deepshikha Bhardwaj

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