Tag: Indian rupee

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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Dollar’s five-week winning streak ends as risk sentiment rebounds, BFSI News, ET BFSI

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NEW YORK -The dollar edged lower against a basket of major currencies on Friday, on track to end its five-week winning streak, as global risk appetite rebounded, helping reduce demand for the safe-haven currency.

Global stock markets have rallied this week as fears about a stagflationary economy have been eased by forecast-beating corporate earnings in the United States.

Unexpectedly strong U.S. retail sales data for September also boosted sentiment. Retail sales rose 0.7% last month, versus expectations of a 0.2% decline, helped in part by higher prices.

“The risk appetite here remains really, really strong for the time being,” said Boris Schlossberg, managing director of FX strategy at BK Asset Management.

“That’s helping the high beta currencies like the pound, the euro and the Aussie, simply because the market is feeling much more positive,” he said.

The dollar index initially firmed after the retail sales data, but then trended lower and was last down 0.106% at 93.941. The greenback was down 0.19% for the week, after having appreciated for the previous five weeks, and hitting a one-year high of 94.563 on Tuesday.

The big run-up in dollar strength, based on expectations that the U.S. Federal Reserve may begin hiking rates sooner than had been anticipated, may have been overblown, and the dollar is now consolidating, said Marc Chandler, chief market strategist at Bannockburn Global Forex.

“Next week will help clarify whether we are consolidating, and whether the consolidation is just like a breath that refreshes or is a prelude for a correction,” he said.

The greenback had rallied against its major peers since early September on expectations the U.S. central bank would tighten monetary policy more quickly than previously expected amid an improving economy and surging energy prices.

Minutes of the Fed’s September meeting confirmed this week that a tapering of stimulus is all but certain to start this year, although policymakers are sharply divided over inflation and what they should do about it.

Money markets are currently pricing in about 50/50 odds of a 25 basis point rate hike by July.

Sterling rose 0.57% to $1.3765, hitting its highest since Sept. 17, while the euro edged down 0.03% to $1.1595 after touching $1.1624 on Thursday for the first time since Sept. 4.

The risk-sensitive Aussie dollar added 0.02% to $0.7417, having climbed to $0.7439 earlier in the session. New Zealand’s dollar jumped 0.54% to $0.7068, extending Thursday’s 1% surge.

The Japanese yen was the biggest loser, dropping to as low as 114.46 yen per dollar, its weakest since October 2018. The yen is a safe-haven currency and has been knocked by the rebound in risk sentiment including in Asia. The dollar was last up 0.53% against the yen at 114.28 yen.

In cryptocurrency markets, the price of bitcoin topped $60,000 for the first time in six months and was not far from its record high on bets U.S. regulators will approve a bitcoin futures exchange traded fund.

During the reporting week ended October 8, the rise in the reserves was on account of an increase in the Foreign Currency Assets (FCAs), Reserve Bank of India’s (RBI) weekly data released on Friday showed.



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Rupee falls 10 paise to 74.20 against US dollar in early trade

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The Indian rupee slumped 10 paise to 74.20 against the US dollar in opening trade on Tuesday as rising crude oil prices weighed on investor sentiment.

At the interbank foreign exchange, the rupee opened lower at 74.18 against the dollar, then fell further to 74.20, registering a fall of 10 paise over its previous close.

Also read: Rupee closes down 24 paise at 74.10 a dollar

On Monday, the rupee had settled at 74.10 against the US dollar.

“Asian currencies have started weak against the greenback this Tuesday morning and surging crude oil prices could continue to keep appreciation bias limited,” Reliance Securities said in a research note.

Global oil benchmark Brent crude futures rose 0.32 per cent to $75.14 per barrel.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 0.03 up 91.93 per cent.

“The US dollar index was flat this morning in Asian trade ahead of the Fed Chairman Powell testimony tonight. Investors will wait and watch if he confirms the hawkish outlook or tries to row back market expectations of faster tightening,” the Reliance Securities’ note said.

On the domestic equity market front, the BSE Sensex was trading 471.17 points or 0.90 per cent higher at 53,045.63, while the broader NSE Nifty advanced 144 points or 0.91 per cent to 15,890.50.

Foreign institutional investors were net sellers in the capital market on Monday, offloading shares worth ₹1,244.71 crore, as per exchange data.

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Rupee falls 20 paise to 73.58 against US dollar in early trade

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The Indian rupee slumped 20 paise to 73.58 against the US dollar in opening trade on Wednesday, weighed down by the strength of the greenback and weak domestic equities.

At the interbank forex market, the domestic unit opened at 73.56 against the US dollar, then fell further to 73.58, registering a fall of 20 paise over its previous close.

On Tuesday, the rupee had settled at 73.38 against the American currency.

Most of the Asian currencies were weak this Wednesday morning and will weigh on sentiments, traders said.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, advanced 0.13 per cent to 93.41.

“The US dollar was flat to higher against the basket of currencies this Wednesday morning in Asian trade as investors bet that massive fiscal stimulus and aggressive vaccinations will help the US lead a global pandemic recovery,” Reliance Securities said in a research note.

On the data front, the government is likely to announce borrowing plan for April-September. Additionally, the government is scheduled to release April-February fiscal deficit data. RBI is also likely to release October-December current account data, the note added.

In the domestic equity market, the 30-share BSE benchmark Sensex was trading 422.74 points lower at 49,713.84, and the broader NSE Nifty fell 96.85 points to 14,748.25.

Foreign institutional investors were net buyers in the capital market as they purchased shares worth ₹769.47 crore on Tuesday, according to exchange data.

Brent crude futures, the global oil benchmark, rose 0.48 per cent to $64.45 per barrel.

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Deccan Urban Co-op Bank withdrawals capped at Rs 1000 per customer; RBI bars from lending, investing

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(Image- REUTERS)

The Reserve Bank of India (RBI) on Friday imposed a Rs 1,000 cap on withdrawals from all savings, current or any other accounts of Deccan Urban Cooperative Bank. The restrictions shall stay in force for a period of six months as RBI looks to improve the bank’s liquidity position, the central bank said in a statement late Friday. The curbs come into force from the close of business on Friday, February 19, 2021. The withdrawal limit imposed on the bank is similar to that imposed on PMC Bank, Lakshmi Vilas Bank, and Mantha Urban Cooperative Bank in the past.

Deccan Urban Co-operative Bank, a Karnataka-based lender, has also been barred from granting or renewing any loans and advances. It has also been barred from making any investment; incurring any liability including borrowal of funds and acceptance of fresh deposits; disbursing or agreeing to disburse any payment, whether in the discharge of its liabilities and obligations, or otherwise.

The move will also restrict Deccan Urban Co-operative Bank’s ability to enter into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets except as notified in the RBI in its direction sent to the bank.

Although the withdrawal limit has been capped to just Rs 1,000 per account, RBI has said that depositors will be allowed to set off loans against deposits subject to some conditions. “The issue of the above Directions by the RBI should not per se be construed as a cancellation of the banking license by RBI. The bank will continue to undertake banking business with restrictions till its financial position improves,” the Reserve Bank of India said.

RBI had earlier in November last year imposed a penalty of Rs 1 lakh on Deccan Urban Co-operative Bank, for contravention of the directions issued by it on the prohibition of loans and advances to directors. The central bank has earlier placed similar restrictions on banks such as Yes Bank where the withdrawal limit was capped to Rs 50,000. Similarly, PMC Bank’s withdrawal limit was also capped to Rs 50,000 but was later revised t0 Rs 1 lakh. Lakshmi Vilas Bank was the latest in the line where the withdrawal limit was capped at Rs 25,000 per account.

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Nifty ends with fresh record highs above 14,550; Nifty Bank adds 1%, BFSI News, ET BFSI

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Nifty bank index traded Green at Rs 32,339 adding 1.06%, while BSE Bankex ended at 36,450 adding 0.62%.

Shares that contributed the most were- IDFC First Bank at Rs 47 adding 6.07% followed by Bank of Baroda at Rs 70 (10.12%), PNB at Rs 36 (4.58%), SBI at Rs 292 (3.54%), HDFC Bank at Rs 1,481 (2.04%). While all the other major indices remained green, Kotak Mahindra traded lower at Rs 1,903 (-1.79%), Bandhan Bank at Rs 391 (-4.15%) and Induslnd Bank at Rs 927 (-0.16%).

Nifty Financial Services ended at 15,711 adding 0.68%. Amongst the top gainer were Cholamandalam at Rs 443 adding 3.81% followed by Power Finance at Rs 121 (1.42%), Bajaj finance at Rs 5,042 (1.16%), Indiabulls Hsg at Rs 234 (0.13%). Bajaj Finserv shares traded lower at Rs 8,959 (-0.30%) along with HDFC Shares at Rs 2,747 (-0.13%).

Other key takeaways

India’s GNPA could double by September
The central bank on Monday said that the gross non-performing asset (GNPA) ratio of banks could double to reach 13.5% by September this year in a base scenario while on the higher side it is expected to reach 14.8%. The GNPA ratio is used to assess loan losses in the banking sector.

The RBI in the report said that if a severe stress situation occurs the bad loan ratio of the banking system could be the highest since March 1997, when it stood at 15.7%.

PSU Banks under strain
“Two important developments are: bond yields rising in the US and the dollar index again rising above 90. Both these are negatives from the emerging market perspective, but FII inflows continue to be robust, pushing markets higher. Meanwhile the RBI in its Financial Stability Report expressed concern about high potential NPAs of the banking system which may rise above 14%.

PSU banks are likely to be under strain.The well-capitalized large private sector banks are strong and are likely to gain from the woes of the PSU banks,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Rupee ends at days high
With the dollar Index and US yields rising and RBI warning on stock markets/asset prices it seems that we may see some risk aversion in near term. Indian rupee recovered from the lows and ended at day’s high at 73.25 per dollar, amid buying saw in the domestic equity market. It opened marginally lower at 73.42 per dollar against previous close of 73.38 and remained in the range of 73.24-73.47.

Gold Updates
Gold prices in India rebounded to trade flat with a positive bias on the Multi Commodity Exchange (MCX) Tuesday tracking a mixed trend in the international spot prices, while silver prices also traded flat.

Gold futures for February delivery rose 0.09% to Rs 49,383 per 10 grams as against the previous close of Rs 49,341 and the opening price of Rs 49,320 on the MCX. Silver futures traded 0.10% higher at Rs 65,619 per kg. The prices opened at Rs 65,444 as compared to the previous close of Rs 65,555 per kg.

US stocks finish lower with new risks:
A slide in shares of technology giants weighed on the broader market Monday as investors grew wary of the potential for heightened regulation tied to the market’s most enduring winners.

The S&P 500 declined 25.07 points, or 0.7%, to 3799.61 after hitting a record on Friday. The tech-heavy Nasdaq Composite dropped 165.54 points, or about 1.3%, to 13036.43. The Dow Jones Industrial Average shed 89.28 points, or 0.3% to 31008.69.



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