Informist, Tuesday, Jun 6, 2023

By Ananya Chaudhuri

NEW DELHI – The rupee ended higher against the dollar today as state-owned banks persistently sold the greenback for exporters and foreign fund inflows, dealers said.

After moving in a narrow range of 9 paise throughout the day, the Indian unit settled at 82.6000 against the US currency, compared with 82.6700 a dollar on Monday.

The rupee started the day higher against the US unit at 82.5550 as the dollar index fell after data from the Institute for Supply Management showed that the US non-manufacturing Purchasing Managers' index fell to 50.3 in May from 51.9 in April as against a Reuters' poll projection of 52.2. A reading above 50 indicates growth, while one below indicates contraction.

At 1640 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 104.1 as against 103.99 on Monday. It was at 104.04 on Friday. The index fell as much as 103.81 during the day.

Shortly after opening, the Indian unit started to erase some gains and moved to the day's low of 82.6475 against the US currency as banks stepped in to buy dollars on behalf of oil companies and importers, dealers said. 

"There's depreciating sentiment (for rupee), cause oil companies are on the buying (of dollars) side," a dealer at a state-owned bank said.

Crude oil prices rose Monday as the supply prospect of the commodity became bleak after Saudi Arabia's energy minister said production will fall to 9 mln barrels a day in July from around 10 mln bbl a day in May, marking the country's biggest reduction in years.

At 1641 IST, the July contract of Brent crude oil on the Intercontinental Exchange was at $75.06 a barrel as against $76.71 a bbl on Monday. It was at $76.13 a bbl on Friday.

Dealers also said banks bought the greenback ahead of the daily reference rate fixing which further exerted pressure on the rupee. 

However, state-owned banks stepped in to sell the greenback for exporters and foreign fund inflows that supported the local unit, dealers said. "Public sector banks were selling at around 82.65 (a dollar) level, likely to change their trading position or for their clients," a dealer at a state-owned bank said. 

Throughout the day, the rupee traded in a narrow range of 9 paise as most of the traders exercised caution ahead of the outcome of Reserve Bank of India's policy meeting which will be published on Thursday.

FORWARDS

Premiums on one-year dollar/rupee forward contracts rose as banks bought dollars on behalf of importers for forward delivery at relatively low levels, dealers said. Premiums fell to a near six-month low on Monday. 

Premiums on one-year dollar/rupee forward contracts also rose, tracking a fall in US Treasury yields, dealers said.

US treasury yields declined after data showed that services activity in the country slowed down in May, which led to hopes that the US Federal Reserve may soon end its aggressive rate hike cycle.

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

Traders now await the Reserve Bank of India Monetary Policy Committee's policy review decision on Thursday, dealers said. According to an Informist poll, an overwhelming majority of 29 out of 30 respondents expect the domestic rate-setting panel to keep the repo rate unchanged at 6.50% at the end of its three-day meeting.

The premium on the one-year contract was at 148.00 paise as against 142.39 paise on Monday. On an annualised basis, the premium was at 1.78% as against 1.72% at the previous close.

OUTLOOK

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

Investors are also closely monitoring the Reserve Bank of India's Monetary Policy Committee's policy review meeting, which started today and will conclude on Thursday. 

"Rupee to continue in the range of 82.40 to 82.80 (a dollar level) tomorrow as the MPC meeting of RBI, which started today, continues tomorrow," said Anil Kumar Bhansali, head of treasury, Finrex Treasury Advisors LLP.

Dealers have pegged the immediate key technical resistance for the rupee at 82.3000 a dollar. During the day, the rupee is seen at 82.30-82.80 a dollar.

India Rupee - World FX: Australian dollar up after RBA hikes rate

MUMBAI – The Australian dollar rose 0.6% against the dollar today after the Reserve Bank of Australia in a surprise move  raised the interest rate by 25 basis points to 4.1% today. 

Meanwhile, the dollar index rose slightly today after falling on Monday following the release of the service sector data that indicated that the economy may be cooling. Data from the Institute for Supply Management showed that the US non-manufacturing Purchasing Managers' Index fell to 50.3 last month from 51.9 in April as against a Reuters' poll projection of 52.2. 

According to CME FedWatch tool, market participants have priced in a 78.2% chance that the Fed will pause interest rate at its policy meeting next week, while there is a 21.8% possibility that the US central bank will hike the rate by 25 bps. 

At 1528 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 104.11 as against 103.99 on Monday. It was at 104.04 on Friday.

Both the euro and the pound sterling were 0.2% down against the greenback. (Aiswarya Santhosh)

India Rupee: In thin band; banks' dollar buys for oil importers weigh

NEW DELHI – The rupee moved in a narrow range against the dollar as banks bought the greenback for oil companies and importers which offset the impact of a fall in dollar index, dealers said.

So far today, the rupee traded in a tight range of 9 paise against the US unit.

"After yesterday's (Monday's) data, we expected the dollar/rupee pair to go down, but because of buying (of dollars), it continuously trended towards up only," a dealer at a state-owned bank said. 

The dollar index declined after data from the Institute for Supply Management showed that the US non-manufacturing Purchasing Managers' index fell to 50.3 in May from 51.9 in April as against a Reuters' poll projection of 52.2. A reading above 50 indicates growth, while one below indicates contraction. 

At 1301 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 103.89 as against 103.99 on Monday. It was at 104.04 on Friday.

Banks also bought the greenback ahead of daily reference rate fixing, which weighed on the rupee, dealers said.

Further, losses in local share indices also put pressure on the local unit, dealers said. At 1301 IST, both the Nifty 50 and Sensex were 0.2% down. 

However, some banks sold the US currency at around 82.64 a dollar level on behalf of exporters which supported the Indian unit, dealers said.

Dealers have pegged the next technical resistance for the rupee at 82.30 a dollar. During the day, it is seen at 82.30-82.70 a dollar. (Ananya Chaudhuri)

India Rupee: Up as dollar index falls on weak US services PMI data

NEW DELHI – The rupee was up against the dollar as the dollar index fell after data indicated contraction in the US services activity, which led to market hope that the US Federal Reserve might soon pause its aggressive rate hike cycle, dealers said.

On Monday, data from the Institute for Supply Management showed that the US non-manufacturing Purchasing Managers' index declined to 50.3 in May from 51.9 in April as against a Reuters' poll projection of 52.2. A reading above 50 indicates growth, while one below indicates contraction. 

At 0927 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 103.94 as against 103.99 on Monday. It was at 104.04 on Friday.

Meanwhile, some banks bought the greenback on behalf of importers, which limited gains for the local unit, dealers said.

"Buying (of dollars) is there because from yesterday rupee has recovered," a dealer at a state-owned bank said. "Rupee will be strong today because yesterday's US PMI data which is not up to the mark, so dollar index is down."

Dealers have pegged next technical resistance for the rupee at 82.30 a dollar. During the day, it is seen at 82.30-82.70 a dollar. (Ananya Chaudhuri)

India Rupee: Expected range for rupee - Jun 6

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:

(Ananya Chaudhuri)

India Rupee - Asia FX: Mixed; traders cautious post weak US econ data

MUMBAI – Asian currencies were mixed against the dollar today as traders were cautious ahead of the outcome of the US Federal Open Market Committee's meeting after data showed a slowdown in the US economy.   

Data from Institute for Supply management showed, on Monday, US non-manufacturing Purchasing Manager's Index fell to 50.3 last month from 51.9 in April. A reading above 50 indicates growth in the services industry, which accounts for more than two-thirds of US the economy. 

Moreover, factory orders in the US rose 0.4%, but mainly on account of the defence sector. Excluding defence, orders fell 0.4% and excluding transport orders, where military orders were again the largest, orders fell 0.2%.

The Malaysian ringgit was down 0.4% against the dollar, the Taiwan dollar was up 0.1% against the greenback. 

The South Korean won surged 0.8% against the greenback as South Korean shares rose and hit their highest level in a year on Monday. (Kabir Sharma)

End

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

Edited by Vidhi Verma and Manisha Baxla
 

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.

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2023. All rights reserved.