Informist, Thursday, Jan 27, 2022

By Pratiksha and Arushi Jain

NEW DELHI – The rupee ended sharply lower against the dollar for the third consecutive trading session today because the US unit surged to a near a five-week high after the US Federal Reserve indicated an interest rate hike in March, dealers said.

After moving within a range of nearly 24 paise through the day, the rupee closed at 75.0700 a dollar against Tuesday's close of 74.7750 a dollar. Indian financial markets were closed on Wednesday on account of Republic Day.

At the conclusion of its two-day policy meeting on Wednesday, the US central bank left the federal funds rate target range unchanged at 0.00-0.25%, in line with the market's expectation, but suggested it was preparing to hike key rates as soon as growth recovers amid rampant price rise in the world's largest economy.

While Fed Chairman Jerome Powell suggested that there was room for rate hikes without threatening the labour market and a will to reduce a substantial amount of balance sheet, he did not specify the pace of policy tightening. 

At 1640 IST, the dollar index, which measures the strength of the US currency against a basket of six major currencies, was at 96.91 compared with 96.39 on Wednesday. It was at 95.95 on Tuesday.

Sentiment for the Indian unit was further dampened as some state-owned banks persistently purchased the greenback for oil marketing companies, noting higher Brent crude oil prices, dealers said. Prices of Brent crude oil rose beyond the $90-per-barrel mark today, driven by tight supply and rising geopolitical tensions between Russia and Ukraine, which added to concerns about further disruption in an already tight market.

Geopolitical tensions have risen as Russia has amassed an estimated 100,000 troops along its border with Ukraine over the past several months. After hours-long talks in Paris today, negotiators from Russia and Ukraine agreed that a permanent ceasefire in eastern Ukraine must be observed "unconditionally".

At 1640 IST, the March contract of Brent crude oil on the Intercontinental Exchange was at $90.01 per bbl compared with the previous close of $89.96 per bbl. 

A sharp fall in domestic and other Asian benchmark equity indices also weighed on sentiment for the Indian unit, said dealers. The Nifty 50 and the Sensex ended nearly 1% lower each.

Today, the rupee fell to the day's low of 75.3025 a dollar, before closing at its lowest level since Dec 23.

However, losses in the local unit were limited as some private and foreign banks stepped in to sell dollars for overseas investments into an Indian company raising funds through initial public offering, dealers said.

The three-day IPO of Adani Wilmar opened for public subscription today. The company aims to raise up to 36 bln rupees.

"The general tone of the market was buying (dollars) on dips today. However, during the final trading hours, the rupee appreciated over the 75.15/$1 level due to selling (of dollars) for the (foreign fund) inflows," said a dealer with a state-owned bank.

Dealers said sentiment for the Indian currency was also supported after some banks sold dollars on behalf of exporters at relatively higher dollar/rupee levels of around 75.20-75.30 a dollar.

FORWARDS

The premium on the dollar/rupee forwards contract fell sharply due to dollar sales by some banks on behalf of exporters, dealers said.

On an annualised basis, the premium on the one-year, exact-period dollar/rupee contract was at 4.52%, compared with 4.59% on Tuesday. The premium was at 339.00 paise compared with 345.42 paise on Tuesday.

OUTLOOK

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

"We might not see any sharp movement in the rupee before the release of India's Budget next week," said a dealer with a state-owned bank. Union Finance Minister Nirmala Sitharaman will present the Union Budget for fiscal year 2022-23 (Apr-Mar) on Feb 1.

During the day, the Indian unit is seen at 75.0000-75.4000 a dollar.

India Rupee - World FX: Euro falls on Ukraine tensions; dollar surges

MUMBAI – The euro fell against the dollar today because rising geopolitical tensions between Russia and the US over Ukraine prompted investors to move to the safe haven greenback.

Tensions have risen globally as Russia has amassed an estimated 100,000 troops along its border with Ukraine over the past several months.

Meanwhile, US Secretary of State Antony Blinken said on Wednesday that the US will make sure global energy supplies are not interrupted if Russia takes action.

The dollar index remained near five-week highs in European trade after the US Federal Reserve indicated an interest rate hike in March in its two-day monetary policy meeting outcome on Wednesday.

The US central bank left the federal funds rate target range unchanged at 0.00-0.25%, in line with market's expectation, but Fed Chair Jerome Powell suggested that there was room for rate hikes without threatening the labour market and a will to reduce a substantial amount of balance sheet.

At 1421 IST, the dollar index, which measures the strength of the US currency against a basket of six major currencies, was at 96.83 compared with 96.39 on Wednesday. It was at 95.95 on Tuesday.

Today, commodity-linked currencies such as the Australian dollar and the New Zealand dollar also fell nearly 0.7% and 0.5% against the US dollar, respectively. (Arushi Jain)

India Rupee: Remains down on oil cos' dollar demand, strong US unit

NEW DELHI – The rupee remained sharply lower against the dollar today because some banks persistently purchased the greenback for oil marketing companies, noting elevated Brent crude oil prices, dealers said. 

Prices of Brent crude oil surged on Wednesday and were near the $90-a-barrel mark, driven by tight supply and rising geopolitical tensions between Russia and Ukraine, which added to worries about further disruption in an already tight market.

At 1415 IST, the March contract of Brent crude on the Intercontinental Exchange was at $89.84 per bbl compared with the previous close of $89.96 per bbl. 

The dollar index strengthened more in European trade, which further weighed on the Indian unit, said dealers.

At 1415 IST, the dollar index, which measures the strength of the US currency against a basket of six major currencies, was at 96.82 compared with 96.39 on Wednesday. It was at 95.95 on Tuesday.

Dealers said sentiment for the local unit was also dampened by a sharp fall in domestic benchmark equity indices. At 1415 IST, the Nifty 50 and the Sensex were down 1.1% and 1.2%, respectively.

On the other hand, some banks stepped in to sell dollars on behalf of exporters at relatively higher dollar/rupee levels of around 75.25-75.30 a dollar, which limited the losses in the local unit, dealers said.

The rupee is seen in a range of 75.1000-75.4000 a dollar during the day. (Arushi Jaina and Pratiksha)    

India Rupee: Sharply dn as dlr surges on Fed stance, local shrs fall

NEW DELHI – The rupee fell sharply against the dollar today because the US unit surged against major currencies after the US Federal Reserve indicated an interest rate hike in March at its two-day policy meeting outcome on Wednesday, said dealers.

The US central bank left the federal funds rate target range unchanged at 0.00-0.25%, in line with market's expectation but suggested it was preparing to hike key rates as soon as growth recovers amid rampant price rise in the US economy.

At 1040 IST, the dollar index, which measures the strength of the US currency against a basket of six major currencies, was at 96.65 compared with 96.39 on Wednesday. It was at 95.95 on Tuesday.

Moreover, sentiment for the local unit was also dampened due to a sharp fall in domestic and Asian benchmark equity indices that weakened after the Fed concluded its policy meeting with an indication on raising interest rates, said dealers.

At 1040 IST, the Nifty 50 and Sensex were nearly 1.6% and 1.7% lower, respectively.

"I think the rupee will remain range-bound today as we are expecting selling (of dollars) for (foreign fund) inflows. Also, there may be selling (of dollars) for exporters near the 75.30/$1 levels," said a dealer with a state-owned bank.

"Meanwhile, we are also expecting some buying (of dollars) since oil prices have shot up."

Prices of Brent crude oil surged and touched the $90-a-barrel mark for the first time since 2014 on Wednesday, driven by tight supply and as rising geopolitical tensions between Russia and Ukraine added to worries about further disruption in an already-tight market.

At 1040 IST, the March contract of Brent crude on the Intercontinental Exchange was at $89.24 per bbl compared with the previous close of $89.96 per bbl. Prices had risen to as much as $90.47 a bbl on Wednesday.

The rupee is seen in a range of 74.9000-75.4000 a dollar during the day. (Pratiksha)

India Rupee - Asia FX: Fall as dollar soars on US Fed stance

MUMBAI – Asian currencies fell against the dollar today because the US unit strengthened sharply on Wednesday after the Federal Reserve, at its two-day monetary policy meeting, indicated the beginning of interest rate hikes in March.

The US central bank left the federal funds rate's target range unchanged at 0.00-0.25%, in line with the market expectation, suggesting it was preparing to hike key rates soon as growth recovers amid rampant price rise in the world's largest economy.

US Fed Chair Jerome Powell said there was a room for rate hikes without threatening the labour market and a will to reduce a substantial amount of the central bank's balance sheet.

At 0949 IST, the dollar index, which measures the strength in the US currency against a basket of six major currencies, was at 96.64 compared with 96.39 on Wednesday. It was at 95.95 on Tuesday.

The South Korean won fell over 0.4% against the greenback today, making it the biggest laggard among Asian currencies. 

The Chinese yuan fell against the dollar today after China's industrial profit growth slowed sharply at the end of the year, rising just 4.2% in December from a year ago, according to figures from the National Bureau of Statistics. In November, industrial profit grew 9% from the year-ago period.

The Indonesian rupiah and the Taiwan dollar fell nearly 0.2% and 0.4% against the dollar, respectively. (Arushi Jain)

India Rupee: Expected range for rupee - Jan 27

NEW DELHI – The following are the expected support and resistance levels for the rupee, as forecasted by leading banks and brokerages in an Informist poll:

End

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

Edited by Avishek Dutta

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