Informist, Monday, May 30, 2022

By Pratiksha and Srijonee Bhattacharjee

NEW DELHI/MUMBAI – The rupee was largely steady against the greenback today as traders stayed on the sidelines and refrained from placing fresh bets due to lack of significant cues, dealers said.  

After moving within a narrow range of 10 paise throughout the day, the rupee ended at 77.5375 a dollar, against 77.5650 a dollar on Friday.

The rupee opened higher at 77.5200 a dollar as the dollar index fell to a near five-week low after investors scaled back bets that rising interest rates in the US will spur further gains in the US currency, dealers said. 

Receding concerns about a global recession also led to weakening of the dollar index, dealers said.

Investors now expect that the US Federal Reserve might slow the pace of its tightening after it hiked rates aggressively over the next two months.

The index, which measures the strength in the US currency against a basket of six major currencies, fell to 101.39 today, its lowest level since April 25.

At 1610 IST, the dollar index was at 101.49 compared with 101.64 on Friday. It was at 101.83 on Thursday.

Moreover, domestic and Asian share indices opened sharply higher today, tracking gains on the Wall Street, which also lent support to the Indian unit, dealers said.

Share indices extended their gains through the day as risk sentiment improved after the relaxation of COVID-19 restrictions in major Chinese cities of Beijing and Shanghai.

China lifted some COVID-19 restrictions after the number of infections fell in the key business centre of Shanghai and capital Beijing. This led to easing of concerns of a slowdown in growth in the world's second-largest economy.

Both the Nifty 50 and the Sensex ended 1.9% higher each.

Meanwhile, prices of crude oil rose today and hit their highest in over two months, as traders waited to see whether the European Union would reach an agreement to ban Russian oil imports. This limited gains in the Indian currency, dealers said.

On Sunday, the European Union failed to agree on an embargo on Russian oil. The EU is due to meet today and Tuesday to discuss a sixth package of sanctions against Russia for its invasion of Ukraine.

Crude oil prices were also supported by expectation of stronger demand as the US driving season gets underway and weakness in the US dollar. A weaker dollar makes oil less expensive for importers holding other currencies.

At 1610 IST, the July contract of Brent crude oil on the Intercontinental Exchange was at $119.81 a bbl against the previous close of $119.43 a bbl. It was at $117.40 on Thursday. 

The rupee traded in a thin range of 77.50-77.56 a dollar for most of the trading session as volumes remained lacklustre, and closed at 77.5375 a dollar.

"The trade has been dull since last week. Today the US market was closed so low volumes were anyway expected," a dealer with a state-owned bank said. US financial markets were closed today for Memorial Day.

FORWARDS

The premiums on dollar/rupee forwards were broadly unchanged in the absence of fresh triggers, dealers said.

The premium on the one-year, exact-period dollar/rupee contract was at 295.95 paise, as against 295.00 paise on Friday. On an annualised basis, the premium was 3.82% as against the previous close of 3.80%.

Activity in the swap market was also subdued as markets in the US were shut today on account of Memorial Day. 

Accounting for the current view on interest rate differential between US and India, premiums are now settled in a suitable range, dealers said.

OUTLOOK

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

"In the past few days, the Indian rupee was trading in a narrow range despite other emerging market currencies being in an appreciating mode. This indicates that the rupee should have a stronger move towards 77.10 and 76.80 over the short term," a brokerage firm said in a note. 

Dealers have now pegged strong key technical resistance for the rupee at 77.30 a dollar. 

During the day, the rupee is seen within a range of 77.30-77.70 a dollar.

India Rupee: Largely steady on absence of significant cues

NEW DELHI – The rupee remained largely steady against the greenback as traders stayed on the sidelines and avoided placing fresh bets due to a lack of significant cues, dealers said.  

"The market is very dull today. Volumes are thin as the US market is closed," a dealer with a state-owned bank said. 

US financial markets are closed today for Memorial Day.

For the rest of the day, the Indian unit is seen at 77.4000-77.7000 a dollar.  (Pratiksha)

India Rupee: Rises as dollar index weakens, domestic equities surge

NEW DELHI – The rupee rose against the greenback today because the dollar index weakened globally after investors scaled back bets that rising interest rates in the US would lead to further gains in the US currency, dealers said.

Easing of concerns about a global recession also led to weakening of the dollar index, dealers said.

At 0935 IST, the dollar index, which measures the strength of the US currency against a basket of six major currencies, was at 101.58 compared with 101.64 on Friday.

Domestic and other Asian equity indices surged today, tracking gains on Wall Street, which also provided support to the Indian unit, dealers said. At 0935 IST, both the Nifty 50 and the Sensex were up 1.6% each.

The gains in equities were also due to China lifting some COVID-19 restrictions after the number of infections fell in the key business centre of Shanghai and capital Beijing. This led to easing of concerns of a slowdown in growth in the world's second-largest economy.

"The overall trend looks like of appreciation today. However, we might see buying (of dollars) for oil importers and outflows," a dealer with a state-owned bank said. "The 77.40 (a dollar) level will be in focus. If it breaches, we might see the rupee moving towards 77.30 (a dollar)."

Dealers have now pegged key technical resistance for the rupee at 77.30 a dollar.

For the rest of the day, the Indian unit is seen at 77.3000-77.7000 a dollar.  (Pratiksha)

India Rupee - Asia FX:Up as easing of curbs in China lifts sentiment

MUMBAI--Asian currencies gained against the US dollar today amid a risk-on sentiment spurred by positive news developments over the weekend.

Shanghai offered tax rebates for companies and allowed all manufacturers to resume operations from June to revitalise the economy. Hong Kong will also ease some COVID-19 testing requirements for incoming travellers, taking a step towards relaxing travel restrictions.

However, a surge in crude oil prices weighed slightly on Asian currencies. Crude oil rose further on renewed concerns over surging demand, particularly as Russian oil supply continues to lag. (Richard Fargose)

India Rupee: Expected range for rupee - May 30

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 Vidhi Verma

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