Informist, Monday, Oct 11, 2021

By Arushi Jain

MUMBAI – The rupee today slumped to its lowest level against the dollar in over 15 months because foreign banks persistently purchased dollars on behalf of oil marketing companies due to a sharp rise in Brent crude oil prices, dealers said.

Some foreign banks also bought dollars on behalf of a large Indian engineering conglomerate on account of foreign fund outflows, which further weighed on the rupee, said dealers.

Today, the Indian currency settled at 75.3550 a dollar, its lowest level since Jul 14, 2020, compared with 74.9850 at 1530 IST on Friday.

The Indian rupee has depreciated nearly 1.5% so far this month.

Prices of Brent crude oil surged beyond $84 per barrel today amid an energy crisis that has gripped major economies globally. This comes amid a pick-up in economic activity after easing of COVID-induced restrictions and supply disruptions from major oil producers.

At 1627 IST, the December contract of Brent crude on the Intercontinental Exchange was at $84.30 per bbl, compared with $82.39 a bbl at close on Friday. It touched the day's high of $84.38 per bbl today.

"Overall, there is a good bidding (dollar buying) seen by foreign banks," said a dealer with a private bank. "This is because there are some (foreign fund) outflows and as oil prices are surging."

Dealers said two UK-based banks and a US-based bank were among the major buyers of dollars today.

The dollar also gained against a basket of major currencies in European trade as investors expect that the US Federal Reserve may begin tapering its massive asset purchases from November.

This further dampened investor sentiment for the Indian currency and dragged the rupee to the day's low of 75.3900 a dollar.

The dollar index and US bond yields rose despite worse-than-expected jobs data, suggesting that the weak data did not have enough impact on the market's expectations that the Fed will announce asset tapering earlier than expected.

Data released by the US Labor Department showed non-farm payrolls rose at a tepid pace of 194,000 in September, whereas economists polled by Reuters had forecast an increase of 500,000 jobs. The unemployment rate for September fell to 4.8% from 5.2% in August.

At 1627 IST, the dollar index, which measures the US currency against six other major units, was at 94.23 compared with 94.10 on Friday. It was at 94.22 on Thursday.

For further cues on economic recovery in the world's largest economy, investors are now looking at data on inflation and retail sales in the US, due to be released this week.

Investors also await the release of minutes of the US Federal Open Market Committee's meeting, due on Wednesday. 

"We saw that state-owned banks sold (dollars) near 75.23/$1 levels, but exporters are not stepping in (to sell dollars) now as they are waiting to get better (dollar/rupee) levels to hedge later on," the dealer said. 

FORWARDS

The premium on dollar/rupee forwards contract ended lower because state-owned banks sold dollars for forward delivery on behalf of exporters, and likely for the Reserve Bank of India, dealers said.

On an annualised basis, the premium on the one-year, exact-period dollar/rupee contract was at 4.43%, against 4.46% on Friday. The premium was at 333.95 paise, compared with 334.53 paise on Friday.

OUTLOOK

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

While banks are expected to continue to buy dollars on behalf of oil marketing companies noting high Brent crude prices, dollar sales by some banks for exporters at higher dollar/rupee levels are likely to prevent any sharp fall in the Indian rupee, dealers said.

Dealers have now pegged strong key technical support for the rupee at 75.50 a dollar.

The rupee is seen at 75.0000-75.5000 a dollar during the day.

India Rupee: Near 6-mo low as banks buy dollars for oil importers

MUMBAI – The rupee moved at its lowest level in over six months intraday today because foreign banks persistently purchased dollars on behalf of oil marketing companies noting elevated Brent crude oil prices, said dealers.

Today, the Indian currency fell to its lowest level since Apr 22.

A UK-based bank and a US-based bank were among the major buyers of dollars today, dealers added.

At 1330 IST, the December contract of Brent crude on the Intercontinental Exchange was at $83.75 per barrel, compared with $82.39 a bbl at close on Friday.

"Right now oil prices are the major concern for the rupee," said a dealer with a private bank. "Only if there is a correction in oil prices, the rupee may reverse losses from here."

Dollar also remained elevated as investors expect the US Federal Reserve to begin tapering its massive asset purchases from November, which further dampened sentiment for the local unit, said dealers.

At 1330 IST, the dollar index, which measures the US currency against six other major units, was at 94.12 compared with 94.10 on Friday. It was at 94.22 on Thursday.

However, a rise in domestic equity indices provided some support to the Indian unit, dealers said.

At 1330 IST, Nifty 50 and the Sensex were up nearly 0.8% and 0.7%, respectively.

With immediate key technical support for the rupee pegged at 75.35 a dollar, the Indian unit is expected to move in a range of 75.00-75.40 a dollar during the day.  (Arushi Jain)

India Rupee: Falls as mkt sees Fed on track to begin asset taper Nov

MUMBAI – The rupee fell against the dollar today because the US unit gained against a basket of major currencies as investors expect the US Federal Reserve to begin tapering its massive asset purchases from November, said dealers.

At 1022 IST, the dollar index, which measures the US currency against six other major units, was at 94.15 compared with 94.10 on Friday. It was at 94.22 on Thursday.

Yield on the US Treasury notes also rose, which further weighed on the Indian currency, said dealers.

The rise came despite a lower-than-expected jobs data, suggesting that investors worldwide have braced for a sooner-than-expected tapering of the $120-bln monthly asset purchases by the Fed, dealers said.

Earlier this year, US central bank officials had projected interest rate hikes to be announced by 2023.

Data released by the US Labor Department showed that non-farm payrolls rose at a tepid pace of 194,000 in September. Economists polled by Reuters had forecast an increase of 500,000 jobs. The unemployment rate for September fell to 4.8% from 5.2% in August.

Meanwhile, a rise in domestic equity indices provided some support to the Indian unit, dealers said.

At 1022 IST, Nifty 50 and the Sensex were up 0.4% and 0.3%, respectively.

With key technical support for the rupee pegged at 75.30 a dollar, the Indian unit is expected to move in a range of 74.90-75.30 a dollar during the day.  (Arushi Jain)

India Rupee - Asia FX: Most up on gains in local equity markets

NEW DELHI - Most Asian currencies were up against the US dollar after gains in regional equity markets in early trade today spurred appetite for riskier assets. 

The US dollar index was steady against a basket of major currencies as yield on the US Treasury notes rose despite a lower-than-expected jobs data due to expectations of US Federal Reserve’s asset purchase tapering from November.  

At 0930 IST, the dollar index was at 94.15 compared with 94.10 on Friday. It was 94.22 on Thursday.

Meanwhile, the Philippine peso was down 0.2% against the dollar after Fitch Ratings and the ASEAN+3 Macroeconomic Research Office trimmed the country's growth forecasts amid the persistent COVID-19 outbreak and sluggish vaccine rollout. 

Fitch lowered the Philippine GDP growth projection to 4.4% in 2021, from 5.0% previously while the ASEAN+3 Macroeconomic Research Office slashed its GDP forecast for the country to 4.3%, from 6.4%. (Shubham Rana and Pratiksha)

India Rupee: Expected range for rupee - Oct 11

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

(Arushi Jain)

End

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

Edited by Avishek Dutta

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