Tag: dollar rate

Rupee strengthens vs dollar on IPO flows; gains capped before US FOMC statement, BFSI News, ET BFSI

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NEW DELHI: The rupee strengthened marginally versus the US dollar on Wednesday because of a drop in global crude oil prices and on the back of dollar sales by foreign banks for overseas investments in initial public offerings of Indian companies, dealers said.

The domestic currency on Wednesday opened at 74.60 against the US dollar as against 74.6775 at the previous close. The local unit, which was last at 74.5550 versus the greenback, moved in the range of 74.5375-74.6425 so far in the day.

Crude oil prices declined, providing some relief for traders on the twin fronts of inflation and the trade deficit. India is the world’s third-largest importer and consumer of crude oil.

Oil futures for December delivery on the New York Mercantile Exchange declined 0.2 per cent to close at $83.91 per barrel on Tuesday.

The rupee had also gained sharply on Tuesday on account of flows for overseas investment into local companies, with the domestic currency adding 0.3 per cent versus the greenback.

“There were flows for Policybazaar IPO etc. And now we have Paytm IPO lined up as well next week,” a dealer with a private bank said on condition of anonymity.

“Oil seems to have stabilised a bit after the surge of this month. But having said that, we don’t expect a major degree of appreciation before the Fed’s statement. Whatever they say on tapering is going to set the tone for markets,” he said.

The US Federal Open Market Committee is scheduled to release its monetary policy statement late Wednesday.

Details of a potential rollback in quantitative easing in the world’s largest economy may play a major role in overseas investors’ appetite for emerging market currencies such as the rupee.

Government bonds were steady, with the yield on the 10-year benchmark 6.10 per cent 2031 paper unchanged at 6.36 per cent. Bond prices and yields move inversely.

Bond traders kept to the sidelines in a heavily truncated week. The market will be shut on Thursday and Friday on account of Diwali and Diwali Balipratipada.



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Rupee, government bonds gain as mkts cheer sharp decline in CPI inflation, BFSI News, ET BFSI

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NEW DELHI: The rupee gained against the US dollar in early trade Wednesday because of a sharp decline in Consumer Price Index-based inflation for September and as global crude oil prices retreated from multi-year highs, dealers said.

The domestic currency on Wednesday opened at 75.3150 to a dollar, stronger than 75.5060 per dollar on Tuesday. At 10:20 hours (IST), the local unit traded at 75.2675 per dollar.

Data released after trading hours on Tuesday showed that India’s headline retail inflation declined sharply to 4.35 per cent in September versus 5.30 per cent in August.

While domestic retail inflation has been softening over the past couple of months, a recent jump in global crude oil prices had led to fears of fresh upside risks to inflation.

Crude oil prices have climbed to multi-year highs since last week due to concerns of global demand outstripping supply.

Comfortingly for local currency traders, Brent crude futures declined on Tuesday, with the contract for December delivery shedding $0.23 to close at $83.42 per barrel.

“There is a pull-back in crude oil prices which is providing support but the larger positive is the sharp decline in inflation,” a dealer with a large private bank said on condition of anonymity.

“After the kind of depreciation we have seen this month, there is also some dollar selling by foreign banks for exporters. Because they want to lock in a good level. 75.50/$1 was breached yesterday but it is unlikely that RBI will let it go to 76/$1 very soon,” he said.

The rupee has shed around 1.5 per cent against the US dollar so far this month.

Government bonds also gained with yield on the 10-year benchmark 6.10%, 2031 paper last at 6.31%, two basis points lower than previous close, as traders welcomed the inflation print for September.

Bond prices and yields move inversely.

With the fall in headline retail inflation last month providing breathing room to the RBI, bond dealers believe that the central bank may not be in a rush to commence raising interest rates.

“After the last policy statement (on Friday), there was a lot of talk about how the reverse repo rate will be raised in December, I think RBI could stretch it out till February, given that inflation so far is behaving itself. The only joker in the pack is oil prices,” a dealer with a large foreign bank said on condition of anonymity.



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