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India Rupee Review: Steady on persistent dollar sales by RBI

Informist, Tuesday, Oct 11, 2022

 

By Pratiksha

 

NEW DELHI – The rupee pared all losses against the dollar and closed steady today due to persistent sales of the greenback by the Reserve Bank of India, dealers said.

 

The rupee ended at 82.3125 a dollar, against 82.3200 a dollar on Monday. The movement in the unit throughout the day was restricted to 10 paise.

 

The Indian unit opened slightly weaker because the dollar gained globally ahead of US CPI inflation data for September, due on Thursday, dealers said.

 

The data is likely to show that price pressures remain elevated in the world's largest economy, thus, adding to expectation of further aggressive rate hikes by the US Federal Reserve.

 

The data is likely to show that headline inflation rose to 8.1% year-on-year in September, marginally down from 8.3% in August. Core inflation is expected to have risen to 6.5% from 6.3% previously.

 

At 1615 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 113.21, compared with 113.14 on Monday. It was at 112.80 on Friday.

 

The Indian currency gradually fell to the day's low of 82.4125 a dollar as foreign banks persistently purchased dollars on behalf of oil marketing companies and importers on expectations of further depreciation in the rupee, dealers said.

 

"There was ample buying (of dollars) in the market today. Exporters still seem to be on the sidelines," a dealer with a state-owned bank said. "The dollar index cooled off a bit after European market opened, so that was a positive."

 

However, losses in the Indian currency were restricted as some state-owned banks stepped in to sell the greenback on behalf of RBI around the 82.40-per-dollar level, dealers said.

 

The Indian currency traded in a narrow range of 82.35-82.40 a dollar for majority of the day. However, as the central bank stepped up its dollar sales in the final hour of the trade, the Indian unit erased all losses and touched the day's high of 82.3125 a dollar.

 

"The RBI has been trying to restrict the rupee's range to 82.30-82.40 for three sessions now," a dealer with a private bank said. "Today also it constantly sold around the 82.40 level. Let's see for how long this sustains."

 

Meanwhile, prices of crude oil fell over 2% today as recession fears and a surge in COVID-19 cases in China raised concern about global demand.

 

A fall in the price of crude oil reduces India's import bill, which subsequently supports the Indian currency.

 

At 1615 IST, the November contract of Brent crude oil on the Intercontinental Exchange was at $94.23 a barrel as against $96.19 a bbl on Monday. On Friday, the November contract settled at $97.92 a bbl.

 

A slump in domestic share indices also dampened sentiment for the Indian unit, dealers said. Today, both the Nifty 50 and the Sensex ended 1.5% lower each.

 

 AT 1530 ISTAT 0900 ISTHIGHLOWPREVIOUS(AT 1530 IST)
Spot rupee per $182.312582.350082.312582.412582.3200

 

FORWARDS

Premiums on dollar/rupee forward contracts ended lower as exporters sold dollars for forward delivery, noting a sharp rise in the last two trading days, dealers said. In the last two trading sessions, premium on the one-year dollar/rupee contract rebounded nearly 20 basis points.

 

Premium on the one-year dollar/rupee contract was 234.72 paise, against 244.90 paise on Monday. On an annualised basis, the premium was at 2.85%, against the previous close of 2.97%.

 

Dealers also said that traders are receiving forwards due to expectation that premiums may ease further as the differential between Indian and US bond yields may narrow going ahead.

 

The yield on the benchmark 10-year US Treasury note jumped up 9 basis points early in trade today to 3.98% ahead of the US inflation data on Thursday.

 

OUTLOOK
Wednesday, the rupee will take cues from overnight movement in the dollar index and crude oil prices, dealers said. 

 

"As witnessed, 80 was protected for nearly 50 sessions, 82 was protected for nearly 12 sessions, and now it would be interesting to see how long RBI will be able to hold 83.00 levels," said Amit Pabari, managing director of CR Forex Advisors.

 

Dealers expect the RBI to continue its intervention through dollar sales to protect the rupee from depreciating beyond the psychologically-crucial level of 83 per dollar.

 

They see immediate technical resistance for the Indian currency at 82.20 a dollar and support at 82.80 a dollar.
 
During the day, the rupee is seen at 82.20-82.80 a dollar.


India Rupee – World FX: US dlr firm; Australian dlr at 30-month low

 

 AT 1540 ISTHIGHLOWPREVIOUS
GBP/USD 1.10421.10951.09991.1057
EUR/USD 0.96940.97250.96700.9702
NZD/USD 0.55770.55900.55370.5562
AUD/USD 0.62620.63060.62480.6296
USD/JPY 145.7500145.8700145.5030145.7010
USD/CAD 1.38421.38551.37701.3778
EUR/JPY 141.2910141.6920140.9820141.3900
CHF/USD 1.00051.00180.99781.0002
EUR/CHF 0.96860.97150.96870.9697

 

MUMBAI – The US dollar remained firm against most major currencies today ahead of inflation data due on Thursday. Inflation in the US is expected to remain significantly high.

 

At 1540 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 113.26 compared with 113.14 on Monday. On Friday, it was at 112.80.

 

The dollar was also supported by safe haven demand due to rising geopolitical tension in Europe. Russia fired 75 missiles towards Ukraine in the latest attack this week after an explosion on a strategic bridge connecting Russia with Crimea.


Weak Chinese economic data and lockdown in Shanghai weighed on the Australian dollar. The Australian currency slipped to a two-and-a-half-year low today. China is a top export destination for Australian goods, hence weak Chinese economic data usually dents sentiment for the Australian unit.

 

In China, the Caixin services Purchasing Managers' Index fell sharply in September to 49.3 as against 54.4 forecast. A reading below 50 indicates contraction. (Kabir Sharma and Aiswarya Santhosh)


India Rupee:Premiums dn as exporters sell fwd dlrs after recent jump

 

 AT 1432 ISTAT 0900 ISTHIGHLOWPREVIOUS(AT 1530 IST)
Spot rupee per $182.390082.350082.325082.412582.3200
1-year dlr/rupee fwd (paise)236.97243.47243.47235.72244.90

 

MUMBAI – Premiums on dollar/rupee forward contracts fell as exporters sold dollars for forward delivery, noting a sharp rise in the last two trading days, dealers said. In last two trading days, premium on the one-year dollar/rupee contract has rebounded nearly 20 basis points.

 

The premium on the one-year dollar/rupee contract was 236.97 paise, against 244.90 paise on Monday. On an annualised basis, the premium was at 2.88%, against the previous close of 2.97%.

 

"Yesterday's upmove in premiums was overdone, so exporter receiving is seen today as well," a dealer with a private bank said.

 

Dealers also said traders are receiving forwards due to expectation that premiums may ease further as the differential between Indian and US yields may narrow going ahead.

 

The yield on the benchmark 10-year US Treasury note jumped 9 basis points in early trade today to 3.98% ahead of the US inflation data, due on Thursday.  (Richard Fargose)


India Rupee: In narrow range; RBI's dollar sale restricts losses

 

 AT 1442 ISTAT 0900 ISTHIGHLOWPREVIOUS(AT 1530 IST)
Spot rupee per $182.345082.350082.325082.412582.3200

 

NEW DELHI – The rupee moved in a narrow range against the dollar as losses from dollar purchases by banks on behalf of oil marketing companies and importers were restricted. This was because of persistent sale of dollars on behalf of the Reserve Bank of India, dealers said. 

 

So far today, the dollar/rupee has moved in a thin band of 9 paise.

 

Dealers said some state-owned banks sold dollars on behalf of the central bank, which wanted to prevent the domestic currency from depreciating beyond the psychologically-crucial level of 83 per dollar. 
 

Meanwhile, banks persistently purchased dollars on behalf of oil marketing companies and importers on expectations of further depreciation in the rupee, which weighed on the local unit, dealers said. 

 

Dealers have pegged immediate technical resistance for the rupee at 82.25 a dollar and immediate support at 82.45 a dollar. 

 

For the rest of the day, the Indian unit is seen moving in the range of 82.3000-82.8000 a dollar.  (Pratiksha)


India Rupee-Asia FX:Most units dn on Fed rate hike fear, Ukraine war

 

MUMBAI – Most Asian currencies were down against the US dollar today amid fear of continued aggressive rate hikes by the US Federal Reserve to tackle elevated inflation. The dollar remained firm globally ahead of the US CPI inflation data for September, due on Thursday. 

 

At 1102 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 113.40 compared with 113.14 on Monday. It was at 112.80 on Friday.

 

The geopolitical tensions due to the Russia-Ukraine war escalated after Russia launched a series of missile attacks on Kyiv on Monday. 

 

The Malaysian ringgit slipped 0.5% due to domestic political uncertainty after Prime Minister Ismail Sabri Yaakob dissolved the Parliament. 

 

The Philippines peso remained largely unchanged after aggressive intervention in the currency market by the central bank on Monday, reports said. The Thai baht hit a 26-year low, while the Taiwan dollar slumped 0.8% against the greenback.  (Richard Fargose)


India Rupee: Down as dlr rises ahead of US CPI data, local shrs fall

 

 AT 0930 ISTAT 0900 ISTHIGHLOWPREVIOUS(AT 1530 IST)
Spot rupee per $182.390082.350082.325082.412582.3200

 

NEW DELHI – The rupee fell slightly against the greenback today because the US dollar gained globally ahead of the US CPI inflation data for September, due on Thursday, dealers said.

 

The data is likely to show price pressures remain elevated in the world's largest economy, thus, adding to expectation of further aggressive rate hikes by the US Federal Reserve, they said.  

 

The US CPI data is projected to show that headline inflation growth was at 8.1% year-on-year in September, marginally down from 8.3% in August. Core inflation is expected to have risen to 6.5% from 6.3% previously.

 

At 0930 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 113.34, compared with 113.14 on Monday. It was at 112.80 on Friday.

 

A fall in Asian and domestic equity indices also weighed on the Indian unit, dealers said. At 0930 IST, both the Nifty 50 and Sensex were 0.3% down each. 

 

"It will be the same buying on dips (in dollar/rupee) trend today as well," a dealer with a state-owned bank said. "Looking at yesterday's (Monday's) aggressive RBI intervention, a consolidated range is expected."

 

Dealers have pegged immediate technical resistance for the rupee at 82.25 a dollar and support at 82.80 a dollar. 

 

For the rest of the day, the Indian unit is seen moving in the range of 82.3000-82.8000 a dollar.  (Pratiksha)


India Rupee: Expected range for rupee – Oct 11

 

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

 

Participants

SUPPORT

RESISTANCE

State-owned bank82.7082.20
State-owned bank82.6582.25
Private bank82.7082.30
Foreign bank82.8582.30
Brokerage firm82.6582.15
Brokerage firm82.8082.20
Brokerage firm82.6782.27

(Richard Fargose)

 

End

 

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

 

Edited by Ashish Shirke

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. 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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