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India Rupee Review: Snaps 3-day losing streak on surge in equities

Informist, Wednesday, Oct 13, 2021

 

By Arushi Jain

 

MUMBAI – The rupee snapped its three-day losing streak and rose against the dollar today because of a sharp rise in domestic equities and dollar sales by foreign and state-owned banks, dealers said.

 

The benchmark share indices Nifty 50 and Sensex ended higher by nearly 1% and 0.8%, respectively.

 

The Indian currency closed at 75.3650 a dollar compared with 75.5100 at 1530 IST on Tuesday.

 

The local unit had opened higher at 75.3150 a dollar after the US unit fell early in Asian trade ahead of inflation data and minutes of the US Federal Open Market Committee's meeting in September, both due later today.

 

The key data points will provide investors with further cues on global economic recovery in the world's largest economy and on when the US Federal Reserve will start tapering its massive $120-bln bond-purchase programme.

 

Investors are concerned about the Fed's decision to taper its pandemic relief asset purchases due to growing fears worldwide that rising energy costs will stoke inflation and curtail economic recovery.

 

However, despite growing inflation worries, three Fed policymakers on Tuesday said the US economy has healed enough for the central bank to begin to withdraw its crisis-era support.

 

"I myself believe that the 'substantial further progress' standard has more than been met with regard to our price-stability mandate and has all but been met with regard to our employment mandate," Fed Vice Chair Richard Clarida said at the Institute of International Finance's virtual annual meeting.

 

At 1605 IST, the dollar index, which measures the US currency against six other major units, was at 94.26 compared with 94.52 on Tuesday. It was at 94.32 on Monday.

 

However, the rupee weakened early in trade as state-owned banks stepped in to purchase the US unit on behalf of oil marketing companies due to a sharp rise in Brent crude oil price, dealers said.

 

Prices of Brent crude oil remained elevated near multi-year highs due to tight supply fuelled by global energy crisis. High crude prices increase the country's import bill and subsequently weigh on the rupee.

 

At 1605 IST, the December contract of Brent crude on the Intercontinental Exchange was at $82.84 per barrel, as against $83.42 a bbl at close Tuesday.

 

The day's low for the rupee was 75.5100 a dollar.

 

"Factors like inflationary pressures mainly spurred by high energy prices, supply shortages, and a drop in consumer confidence along with stronger Brent crude prices and higher US yields are keeping traders on edge," said a dealer with a foreign bank.

 

"For dollar/rupee, yesterday's high of 75.67/$1 acts as a first resistance followed by 75.90/$1 while 75.20/$1 now acts as base (support)," the dealer added.

 

On the flip side, noting the higher dollar/rupee levels, foreign banks started to sell dollars on behalf of exporters, which limited further fall of the rupee.

 

Some foreign banks also sold the US unit for overseas investments into Indian companies raising funds through various means, noting a sharp rise in local equity indices, dealers said.

 

Dealers said that some banks sold dollars also ahead of the weekly currency futures expiry on Thursday.

 

These dollar sales lifted the Indian currency to the day's high of 75.1900 a dollar.

 

A US-based bank, a UK-based bank and a Hong Kong-based bank were among the major sellers of dollars, dealers said.

 

"Exporters will get better levels to hedge as the overall bias still remains negative for the rupee," said a dealer with a brokerage. "Importers should use the opportunity of any dips towards 75.20/$1 or below to book near-term payables."

 

1530 IST

1000 IST

HIGH

LOW  

PREVIOUS

(AT 1530 IST)

75.365075.315075.1900

75.5100

75.5100

 

FORWARDS

The premium on dollar/rupee forwards contract ended higher because state-owned and foreign 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 4.45%, against 4.42% on Tuesday. The premium was at 335.54 paise, compared with 333.37 paise on Tuesday.

 

OUTLOOK

On Thursday, the rupee will take opening cues from overnight movement in the dollar index after the US inflation and retail sales data are detailed later today.


The Indian unit will also take cues from the minutes of the Fed's September meeting.

 

Sentiment for the rupee may weaken as oil marketing companies, noting the high Brent crude oil prices, may continue to buy dollars through foreign and state-owned banks, said dealers.

 

However, dollar sales by banks for exporters at higher dollar/rupee levels and likely on behalf of the central bank may check any sharp fall in the Indian rupee, dealers said.

 

The rupee is seen at 75.2000-75.7000 a dollar during the day.


India Rupee: Rises on weak dollar globally, strong local equities

 

 

AT 1040 IST

1000 IST

HIGH

LOW

PREVIOUS

(AT 1530 IST)

Spot rupee per $1

75.3400

75.3150

75.2300

75.3575

75.5100

 

MUMBAI – The rupee rose against the dollar today because the dollar index fell in early Asian trade as investors shifted their focus to inflation data and minutes of the US Federal Open Market Committee's September meeting, both due later today.

 

The key data points will provide investors with further cues on global economic recovery and when the US Federal Reserve will start tapering its massive bond-buying programme. 

 

At 1040 IST, the dollar index, which measures the US currency against six other major units, was at 94.35 compared with 94.52 on Tuesday. It was at 94.32 on Monday.

 

"While we may see some respite for the rupee for a couple of sessions in a curtailed trading week, it may easily again come under pressure on the back of robust dollar index which touched a new one-year high and stays steady around the 94.40 mark at present," said a dealer with a brokerage.

 

A rise in domestic benchmark indices also supported the Indian unit, according to dealers.

 

At 1040 IST, the Nifty 50 and the Sensex were up over 0.7% and 0.5%, respectively.

 

However, gains in the Indian rupee were limited as some banks stepped in to purchase dollars on behalf of oil marketing companies noting elevated Brent crude prices, said dealers.

 

At 1040 IST, the December contract of Brent crude on the Intercontinental Exchange was at $83.30 per barrel, compared with $83.42 a bbl at close on Tuesday.

 

The Indian unit is expected to move in a range of 75.10-75.60 a dollar during the day.  (Arushi Jain)


India Rupee – Asia FX: Most units up as crude oil price eases

 

NEW DELHI – Most Asian currencies were up against the dollar in early trade today after Brent crude oil price eased after touching a three-year high on Tuesday. 

 

At 0850 IST, the December contract of Brent crude on the Intercontinental Exchange was at $83.13 per barrel, as against $83.42 a bbl at close on Tuesday. It was at $83.65 a bbl on Monday.

 

The Korean won and the Philippine peso rose the most at 0.4%, buoyed by gains in the local equity markets.

 

The US dollar was down against major currencies as yield on the 10-year benchmark US Treasury note ended slightly lower on Tuesday after bond traders returned from the three-day weekend and turned their focus to the upcoming key inflation data and minutes from the Federal Reserve’s September meeting due later today.

 

At 0900 IST, the dollar index, which measures the US currency against six other major units, was at 94.35 compared with 94.52 on Tuesday. It was 94.32 on Monday. (Shubham Rana and Pratiksha)


India Rupee: Expected range for rupee – Oct 13

 

MUMBAI – The following are the expected support and resistance levels for the rupee, as forecast by leading banks and brokerages in an Informist poll:

 

 

SUPPORT

RESISTANCE

State-owned bank75.6575.25
State-owned bank75.7075.20
Foreign bank75.6075.20
Private bank75.6575.30
Brokerage firm75.5575.15
Brokerage firm75.6075.30

(Arushi Jain)

 

End

 

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

 

Edited by Ashish Shirke

 

Cogencis news is now Informist. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

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