Informist, Monday, Jul 31, 2023

By Ananya Chaudhuri

NEW DELHI – The rupee ended steady against the dollar today as most traders avoided placing fresh bets due to lack of significant cues, dealers said. They also said volumes were lacklustre in the currency market today. 

After trading in a tight range of 9 paise throughout the day, the Indian currency ended steady against the greenback at 82.2450 compared to 82.2475 a dollar on Friday. 

The Indian currency started the day steady at 82.2200 against the US currency as traders remained on the sidelines due to absence of significant triggers, dealers said.

Shortly after opening, the Indian unit touched the day's low of 82.2925 against the greenback as banks rushed to purchase dollars on behalf of oil marketing companies who were worried about high crude oil prices, dealers said. 

Oil prices rose as the market is optimistic about robust demand and supply cuts will keep prices higher.

"The major problem for Indian rupee is the riding oil prices which due to Saudi cuts, are now at almost $85 a bbl, which could pose a problem for trade deficit and current account deficit of India," Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors LLP.

Recently, Saudi Arabia and Russia extended their crude oil production cuts which is expected to impact the commodity's supply throughout the second half of the 2023. 

At 1626 IST, the September contract of Brent crude oil on the Intercontinental Exchange was at $85.58 a bbl as against $84.99 a bbl on Friday. It was at $84.24 a bbl on Thursday.

However, banks also sold the greenback on behalf of exporters who wanted to take advantage of relatively higher dollar/rupee levels which pushed the Indian unit to the day's high of 82.2075 a dollar, dealers said. 

"As soon as it (rupee) touched the 82.28-82.29 (a dollar) level, we saw selling (of dollars)," a dealer at a state-owned bank said. "It was general selling (of dollars) for exporters." 

Gains on local share indices also supported the Indian unit, dealers said. Today, both the benchmark the Nifty 50 and Sensex ended 0.6% higher.

FORWARDS

Premiums on one-year dollar/rupee forward contracts ended at a three-week low today, tracking a jump in US Treasury yields, dealers said.

US Treasury yields rose tracking a jump in Japanese government bond yields after the Bank of Japan's policy decision. At the policy review last week, the Japanese central bank kept its rates unchanged, retaining the 50-basis-point limit on either sides of the 0% target on the 10-year Japanese government bond yield. The central bank also said that it will operate the yield curve control more flexibly.

However, some banks and importers bought dollars for forward delivery at relatively low levels, which limited the fall in premiums on dollar/rupee one-year forward contract, dealers said. 

"The forward premiums are actively tracking the US yields," said a dealer with a private bank. "Some importers are also paying around these levels but not very much."

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

The premium on the one-year dollar/rupee contract was 134.46 paise, against 137.23 paise on Friday. On an annualised basis, the premium was at 1.63%, against the previous close of 1.66%.

OUTLOOK

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

"Tomorrow (Tuesday), we have some data. Once they are out, we'll get some directions," a dealer at state-owned bank said. Market participants now await the release of US, UK, and Europe's manufacturing purchasing index data, which are scheduled for release on Tuesday. 

During the day, the rupee is seen in a range of 82.00-82.50 a dollar. Dealers peg the immediate key technical support for the rupee at 82.30 a dollar.

India Rupee - World FX: Euro flat post Eurozone econ data; dlr firm

NEW DELHI – The euro was flat against the dollar today after data showed inflation in the eurozone continued to decline, which raised hopes among investors that the European Central Bank may slow down the pace of monetary policy tightening. 

Data showed consumer prices fell to 5.3% on year this month from 5.5% in June. The core consumer prices, excluding energy and unprocessed food, fell to 6.6% on year against 6.8% in June. 

Additionally, preliminary estimate showed eurozone's GDP expanded 0.3% in Apr-Jun, against a Reuters poll expectation of 0.2% growth for the quarter, indicating the region technically avoided recession which boosted investors' sentiments. 

The pound sterling rose 0.1% against the dollar as traders await the outcome of the Bank of England's policy review meeting outcome. The UK central bank is widely expected to raise the benchmark bank rate by 25 basis point. 

The dollar index remained firm ahead of the release of non-farm payroll data later this week. At 1456 IST, the dollar index, which measures strength of the greenback against a basket of six major currencies, was at 101.72 as against 101.62 on Friday. It was at 101.77 on Thursday.  (Ananya Chaudhuri)

India Rupee: Premiums slump to 3-week low as US Treasury yields jump

NEW DELHI – Premiums on one-year dollar/rupee forward contracts fell to a three-week low today, tracking a jump in US Treasury yields, dealers said.

US Treasury yields rose tracking a jump in Japanese government bond yields after the Bank of Japan's policy decision. At the policy review last week, the Japanese central bank kept its rates unchanged, retaining the 50-basis-point limit on either sides of the 0% target on the 10-year Japanese government bond yield. The central bank also said that it will operate the yield curve control more flexibly.

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

However, some banks and importers bought dollars for forward delivery at relatively low levels, which limited the fall in premiums on dollar/rupee one-year forward contract, dealers said. 

"The forward premiums are actively tracking the US yields," said a dealer with a private bank. "Some importers are also paying around these levels but not very much."

Traders see near-term technical support for the one-year dollar/rupee forward contract at 1.60%. 

At 1330 IST, the premium on the one-year, exact-period dollar/rupee forward contract was at 134.46 paise as against 137.23 paise at Friday's close. On an annualised basis, the premium was at 1.63% as against 1.66% at the previous close. (Pratiksha)

India Rupee: In thin band on lack of significant cues; volume low

NEW DELHI – The rupee remained in a narrow range against the dollar today as traders avoided placing fresh bets due to lack of significant triggers, dealers said.

"There are no big triggers in the market, so we are not seeing much movement today," a dealer with a private bank said. "Since the volatility in the market is not much lately, traders are not seeing a lot of interest."

So far today, the Indian unit has moved in a range of only 9 paise. Dealers said volume in the currency market was lower than usual today. 

However, some banks sold the greenback on behalf of exporters around 82.29 a dollar, which supported the Indian unit, dealers said.

Some banks also purchased the US unit on behalf of oil marketing companies noting high crude oil prices, which weighed on the domestic unit, dealers said.

At 1257 IST, the September contract of Brent crude oil on the Intercontinental Exchange was at $84.76 a bbl as against $84.99 a bbl on Friday. It was at $84.24 a bbl on Thursday.

Market participants now await the Bank of England's policy meeting outcome, which is due Thursday. The central bank is widely expected to raise rates by at least 25 basis points. 

Dealers pegged the immediate key technical support for the rupee at 82.30 a dollar, and long term support at 82.50 a dollar.

During the day, the rupee is seen in the range of 82.10-82.40 a dollar. (Pratiksha)

India Rupee: Largely steady on absence of significant triggers

NEW DELHI – The rupee was largely steady against the greenback today as traders refrained from placing large bets due to the absence of significant cues, dealers said.

Market participants now await Bank of England's policy meeting outcome, which is due Thursday. The central bank is widely expected to raise rates by at least 25 basis points. 

"There are no fresh triggers as such in the marker after the US FOMC decision, maybe we may see some big moves (in the rupee) after the Bank of England policy," a dealer with a state-owned bank said. 

Meanwhile, the dollar index settled lower on Friday as the US personal consumption expenditures price index for June, the Federal Reserve's preferred inflation gauge, indicated further signs of easing price pressures in the world's largest economy. This provided support to the Indian unit, dealers said. 

The personal consumption expenditures price index, excluding food and energy, increased just 0.2% on month, which was in line with the estimate provided by Dow Jones. Core personal consumption expenditures rose 4.1% on year compared with the estimate of 4.2%. The annual rate was the lowest since September 2021.

This sparked hopes that the Fed's aggressive rate hike cycle may end, with last week's 25-bps rate hike being the last one. 

At 0933 IST, the dollar index was at 101.76 as against 101.62 on Friday. It was at 101.77 on Thursday. The index fell to a low of 101.36 on Friday.

However, a fall in domestic share indices weighed on the Indian currency, dealers said. At 0933 IST, both the Nifty 50 and Sensex were 0.1% down each.

Dealers expect banks to sell the greenback on behalf of exporters around 82.30 a dollar, which may support the Indian unit. 

Moreover, oil marketing companies may step up their greenback purchases noting a rise in crude oil prices, dealers said. Oil prices continued their gaining spree and settled higher on Friday as the market remained optimistic that robust demand and supply cuts will keep prices higher. At 0933 IST, the September contract of Brent crude oil on the Intercontinental Exchange was at $84.45 a bbl as against $84.99 a bbl on Friday. It was at $84.24 a bbl on Thursday.

Dealers pegged the immediate key technical support for the rupee at 82.30 a dollar. During the day, the rupee is seen in the range of 82.10-82.40 a dollar. (Pratiksha)

India Rupee - Asia FX:Most up, dlr index dn on low US inflation data

NEW DELHI – Most of the Asian unit rose against the dollar as the dollar index fell on Friday after the core US personal consumption expenditure price index declined more than expected. The data raised hope among investors that the US Federal Reserve's rate hike cycle is nearing its peak soon.  

The core personal consumption expenditure price index, excluding food and energy prices, rose to 4.1% on year in June against 4.2% forecast by a Dow Jones poll. The index, preferred inflation gauge of the US Fed rose 0.2% on month in June in line with expectation.

At 0923 IST, the dollar index, which measures strength of the greenback against a basket of six major currencies was at 101.75 as against 101.62 on Friday. It was at 101.77 on Thursday. 

The Philippine peso and Malaysian ringgit both rose 0.2% against the greenback. All other Asian currencies rose in the range of 0.1-0.2% against the dollar.

Bucking the trend, the Thai Baht was down 0.1% against the US unit. Thailand witnessed 12 deaths and 121 injuries in an explosion which occurred on Saturday at a firework warehouse in village of Mu No. (Ananya Chaudhuri)

India Rupee: Expected range for rupee - Jul 31

NEW DELHI – Following are the expected support and resistance levels for the rupee today, 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 Maheswaran Parameswaran

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