Informist, Friday, Jun 17, 2022

By Pratiksha and Srijonee Bhattacharjee

NEW DELHI – The rupee was steady against the US dollar 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 7 paise throughout the day, the rupee ended flat at a record closing low of 78.0700 a dollar. 

The rupee opened slightly higher at 78.0500 a dollar due to broad-based weakness in the dollar index after the US Federal Reserve's 75-basis-point hike in interest rate was on expected lines, dealers said. 

In its Jun 14-15 meeting, the US Federal Open Market Committee raised the federal funds target range by 75 basis points to 1.50-1.75%. Fed officials said they expect to hike rates by 175 bps during the rest of the calendar year.

The Fed's massive rate hike did not come as a surprise to the market, which had feared that the central bank would take more drastic steps to curb soaring prices. US CPI inflation unexpectedly surged to a nearly 41-year high of 8.6% on year in May from 8.3% in April.

The dollar index, which measures the strength in the US currency against a basket of six major currencies, fell to 103.42 on Thursday, its lowest since Jun 10. However, it recovered during European trade as the Japanese yen fell as much as 1.9% today after the Bank of Japan maintained its ultra-low interest rate stance. This weighed on the domestic currency, dealers said. 

At 1615 IST, the index was at 104.38 compared with 103.63 on Thursday. It was at 105.16 on Wednesday.

Meanwhile, domestic and other Asian equity indices opened lower today, tracking overnight losses on Wall Street due to growing concerns that sharp rate hikes by central banks might push economies into recession or slow down global growth. This also weighed on the Indian unit, dealers said. 

Benchmark equity indices were in the red for the majority of trade. The Nifty 50 and the Sensex ended 0.4% and 0.3% lower, respectively.

Prices of crude oil rose today after the US announced new sanctions on Iran, and as energy markets remained focused on supply concerns that have sent prices soaring this year. 

The International Energy Agency said it expects demand to rise further in 2023, growing more than 2% to a record 101.6 mln barrels per day. Optimism that demand for oil from China will rebound, as it eases COVID-19 restrictions, also supported prices.

At 1615 IST, the August contract of Brent crude oil on the Intercontinental Exchange was at $120.83 a bbl against the previous close of $119.81 a bbl. 

Some dealers said the Indian currency touched the day's low of 78.0950 a dollar as some banks purchased the greenback on behalf of foreign institutional investors.

The rupee traded in a thin range of 78.04-78.09 a dollar for most part of the trading session as volumes remained lacklustre, and closed at 78.0700 a dollar.

"Trade was as expected dull today. The market needs fresh triggers now since both the MPC and FOMC outcomes have had barely any impact on the rupee," a dealer with a state-owned bank said. 

FORWARDS

Premiums on dollar/rupee forwards rose slightly because market participants bought dollars for forward delivery at low levels to take advantage of the sharp fall early this week, dealers said. 

The premium on the one-year, exact-period dollar/rupee contract was at 259.95 paise, against 253.64 paise on Thursday. On an annualised basis, the premium was 3.33%, against the previous close of 3.25%. 

The one-year contract fell to an over 10-year low on annualised terms to 3.18% on Tuesday, ahead of the outcome of the Fed's meeting on Wednesday, from where it recovered due to some profit-booking. At those levels, it had already fallen by 42 basis points from last week. 

Since the Fed's policy announcement on Wednesday, premiums have stabilised as the hike of 75 bps in interest rates was along expected lines, dealers said. 

OUTLOOK

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

"Overall, the move in rupee might be contained between the new short-term range of 77.80 and 78.30 (a dollar) as the tussle between the fundamentals and the RBI will again be the game. The breaking of 77.80 (a dollar) is crucial for the rupee which will open doors for the appreciation towards 77.10 (a dollar)," a brokerage firm said in a note.   

Dealers see immediate key technical support for the rupee at 78.30 a dollar.

During the day, the rupee is seen in the range of 77.85-78.30 a dollar.

India Rupee - World FX:Yen slumps as BoJ sticks to ultra-loose policy

India Rupee - World FX:Yen slumps as BoJ sticks to ultra-loose policy

India Rupee - World FX: The Japanese yen slumped nearly 2% against the US dollar today after the Bank of Japan stuck to its ultra-loose monetary policy stance.

The Bank of Japan maintained ultra-low interest rates on Friday and its guidance to keep borrowing costs at "present or lower" levels, signalling its resolve to focus on supporting the economy's recovery from the COVID-19 pandemic.

The Bank of Japan has maintained its stance even as other major central banks are aggressively tightening policy to curb surging inflation.

At 1540 IST, the yen was down 1.9% against the US dollar, and 1.5% against the euro.

Bank of Japan Governor Haruhiko Kuroda’s comments failed to support the yen. Kuroda voiced concern about the rapid weakening of the yen after the currency hit its weakest level since 1998 against the US dollar earlier this week. (Richard Fargose)

India Rupee: Premiums tad up as banks buy fwd dollars at low levels

MUMBAI – Premiums on dollar/rupee forwards rose slightly because market participants bought dollars for forward delivery at low levels to take advantage of the sharp fall early this week, dealers said. 

The premium on the one-year, exact-period dollar/rupee contract was at 259.95 paise, against 253.64 paise on Thursday. On an annualised basis, the premium was 3.33%, against the previous close of 3.25%.

After the US retail inflation print for May came in at a 40-year high of 8.6% last week, market participants had braced themselves for aggressive rate hikes by the Fed in the coming months.

This led to a sharp fall in the premium on the first two days of the week, ahead of the announcement on Wednesday, on the view that the interest rate gap between US and India was to narrow further. 

The one-year contract fell to an over 10-year low on annualised terms to 3.18% on Tuesday, from where it recovered due to some profit-booking. At those levels, it had already fallen by 42 basis points from last week. 

Since the Fed's policy announcement on Wednesday, premiums have stabilised as the hike of 75 bps in interest rates was along expected lines, dealers said.  (Srijonee Bhattacharjee)

India Rupee: Remains in tight range in absence of significant cues

NEW DELHI – The rupee remained in a narrow range against the dollar today as traders stayed on the sidelines and avoided placing fresh bets due to lack of significant cues, dealers said.  

The Indian currency has moved in a range of 7 paise so far today.

Earlier today, the rupee touched the day's low of 78.0925 a dollar as some banks purchased the greenback on behalf of foreign institutional investors, dealers said.

Dealers have pegged immediate technical support for the rupee at 78.10 a dollar.

For the rest of the day, the Indian unit is seen at 77.8500-78.2000 a dollar.  (Pratiksha)

India Rupee - Asia FX: Most up as US ylds down; weak equities weigh

NEW DELHI – Most Asian currencies moved slightly higher today as the US Treasury yields plunged overnight due to increased demand for safe-haven assets following adverse economic data in the US.

After hitting a high of 3.45% on Thursday, the yield on the 10-year benchmark US Treasury note slumped to 3.23% in early Asian trade today.

A fall in US Treasury yields widens the interest rate differential between the safe-haven asset and emerging market debt, making the latter more appealing to foreign investors.

However, the gains in Asian currencies were capped by weakness in equity markets amid fears of an economic recession.

Most units were up 0.1-0.3%, while the Indonesian rupiah and Thai bath were down 0.3% and 0.5%, respectively. (Richard Fargose)

India Rupee: Rises on weakness in dlr index; fall in local shrs weigh

NEW DELHI – The rupee rose slightly against the greenback today due to broad based weakness in the dollar index after the US Federal Reserve's 75-basis-point hike in interest rate was on expected lines, dealers said. 

The US Federal Open Market Committee raised the federal funds rate target range by 75 basis points to 1.50-1.75%, and Fed officials said they expect to hike rates by 175 bps in the rest of the calendar year.

On Thursday, the dollar index, which measures the strength in the US unit against a basket of six major currencies, fell to a one-week low of 103.42. Today, it pared some losses and at 0940 IST was at 104.12, still much lower than 105.16 on Wednesday.

Meanwhile, domestic and Asian share indices fell today, tracking overnight losses on the Wall Street on growing investor concerns that sharp rate hikes by global central banks may push economies into recession or slow down global growth. This restricted gains in the Indian unit, dealers said.

At 0940 IST, both the Nifty 50 and the Sensex were down 0.7% each.

"Today will be yet another day of dull trade. The 77.90 (a dollar) level on the upside and the 78.10 (a dollar) level on the downside will be watched closely," a dealer with a state-owned bank said. 

Dealers have pegged immediate technical support for the rupee at 78.10 a dollar.

For the rest of the day, the Indian unit is seen moving in the range of 77.8500-78.2500 a dollar.  (Pratiksha)

India Rupee: Expected range for rupee - Jun 17

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 Avishek Dutta

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