Tag: rupee

Rupee can appreciate before falling further

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The rupee continued its decline over the past week against the US dollar. It slipped below the important level of 75 to mark a fresh one-year low of 75.67 on Tuesday. Thus, the year-to-date loss for the Indian unit against the dollar now stands at 3.35 per cent. While factors like strengthening dollar (appreciated by over 2.5 per cent since September beginning) and rising crude oil prices (gained over 20 per cent since September) are weighing on the local currency, the latest inflation data released by the government on Tuesday might provide a breather. But worryingly, it could be temporary wherein more strength in crude and dollar can continue to put downward pressure on INR.

The data by the Ministry of Statistics and Programme Implementation (MOSPI) show that the inflation based on the Consumer Price Index (CPI) cooled in September. It stood at 4.35 per cent compared to 7.27 per cent in September last year. Notably, there has been a sequential decline and it is on a drop for the last four months. Nevertheless, the rupee is on a decline, especially over the last two months.

Among the factors that drag the rupee is the foreign portfolio investors’ (FPI) outflows. The FPI remained net investors for the month, till a week back. But, now they appear to be pulling money out and therefore, the net investments for October now stands at negative ₹3,047 crore. This was largely due to an outflow of ₹4,120 crore from equities over the past week, taking the net outflows for the current month to ₹1,285 crore. This is despite the equity market doing well. So, going forward, further FPI outflows cannot be rejected and in such case, the local currency will feel the heat.

Charts

The downtrend in the rupee was in place with better momentum over the last week and consequently, it has dragged the INR below the key support of 75. On Tuesday, it marked a fresh one-year low of 75.67 before ending the session a little higher at 75.51.

Although the trend is clearly bearish, the INR seems to be finding support between 75.60 and 75.70. So, the chances are high for a corrective rally during the next few sessions. The rupee can be expected to touch 75.15 and then test the support-turned-resistance level of 75.

However, the rupee strengthening beyond 75 looks unlikely. As such, the corrective rally might face fresh selling pressure which can drag the INR back to the support levels of 75.60 and 75.70. A breach of 75.70 will increase the probability of the rupee touching 76. On the other hand, if INR is able to move above 75, it can rise to 74.80, a resistance level. Subsequent resistance is at 74.65.

Outlook

Even though the trend is bearish, INR has a good chance to appreciate, possibly to 75.15 or even 75, at least in the near-term. This can be on the back of the latest inflation number. Nevertheless, the hardening dollar and crude price can come back to haunt the rupee, which eventually will resume the downtrend, potentially falling back to 75.60 and 75.70 over the next week or so. Beyond that, it can even depreciate to 76 in the following weeks.

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Rupee crashes to 15-month low with 17 paise slump against US dollar

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The rupee tumbled by 37 paise on Monday to hit the lowest level in about 15 months as oil marketing companies stepped up dollar purchases through banks in the wake of sharp uptick in Brent crude oil price and the greenback gaining strength.

The rupee closed at 75.36 to the US Dollar against the previous close of 74.99.

The Indian currency opened weaker at 75.11 per dollar. In intra-day trading, it saw a high and a low of 75.06 and 75.3950, respectively.

 

Crude oil price hike

Brent crude oil price rose almost 2 per cent to cross $84 a barrel.

A combination of factors, including banks’ buying dollar on behalf of oil marketing companies, which probably expect crude oil to become more pricey and are mopping up dollars before it hardens further, and foreign institutional investors, who are liquidating some of their bond market positions before the ripple effect of the China’s bond market slump is felt in emerging market economies, including India, pulling down the rupee, said a chief dealer with a private sector bank.

Brent crude oil could touch $90 per barrel as a global energy crisis looms and this could weaken the rupee further, cautioned the dealer.

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Rupee slumps 17 paise to 75.16 against US dollar in early trade

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The Indian rupee depreciated 17 paise to 75.16 against the US dollar in opening trade on Monday, as rising crude prices and strength of the American currency in the overseas market weighed on investor sentiments.

At the interbank foreign exchange, the rupee opened on a weak note at 75.11, then fell further to 75.16, registering a decline of 17 paise from the last close.

On Friday, the rupee had settled at 74.99 against the US dollar.

Dollar index

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.08 per cent to 94.13.

According to Anil Kumar Bhansali, Head of Treasury, Finrex Treasury Advisors, “with oil above $82 and US yields higher, USD/INR may come down to a maximum of 74.80 where importers may hedge their near-term payable, while exporters may sit quite with a stop loss of 74.75.” Foreign institutional investors were net sellers in the capital market on Friday as they offloaded shares worth ₹64.01 crore, as per exchange data.

On the domestic equity market front, the 30-share Sensex was trading 214.43 points or 0.36 per cent higher at 60,273.49, while the broader NSE Nifty was trading 74.80 points or 0.42 per cent higher at 17,970.

Global oil benchmark Brent crude futures advanced 1.43 per cent to $83.57 per barrel.

Meanwhile, the 13th round of military talks between India and China did not produce any resolution of the remaining issues in eastern Ladakh, the Indian Army said on Monday a day after the dialogue.

It said the Indian side made “constructive suggestions” for resolving the remaining areas but the Chinese side was not agreeable to them and also could not provide any forward-looking proposals.

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Rupee slumps 17 paise to 75.16 against US dollar in early trade

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The Indian rupee depreciated 17 paise to 75.16 against the US dollar in opening trade on Monday, as rising crude prices and strength of the American currency in the overseas market weighed on investor sentiments.

At the interbank foreign exchange, the rupee opened on a weak note at 75.11, then fell further to 75.16, registering a decline of 17 paise from the last close.

On Friday, the rupee had settled at 74.99 against the US dollar.

Dollar index

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.08 per cent to 94.13.

According to Anil Kumar Bhansali, Head of Treasury, Finrex Treasury Advisors, “with oil above $82 and US yields higher, USD/INR may come down to a maximum of 74.80 where importers may hedge their near-term payable, while exporters may sit quite with a stop loss of 74.75.” Foreign institutional investors were net sellers in the capital market on Friday as they offloaded shares worth ₹64.01 crore, as per exchange data.

On the domestic equity market front, the 30-share Sensex was trading 214.43 points or 0.36 per cent higher at 60,273.49, while the broader NSE Nifty was trading 74.80 points or 0.42 per cent higher at 17,970.

Global oil benchmark Brent crude futures advanced 1.43 per cent to $83.57 per barrel.

Meanwhile, the 13th round of military talks between India and China did not produce any resolution of the remaining issues in eastern Ladakh, the Indian Army said on Monday a day after the dialogue.

It said the Indian side made “constructive suggestions” for resolving the remaining areas but the Chinese side was not agreeable to them and also could not provide any forward-looking proposals.

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Rupee falls 8 paise to close at 74.14 against US dollar

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The rupee fell by 8 paise to close at 74.14 against the US dollar on Wednesday amid a lacklustre trend in domestic equities and strengthening of the American currency in the overseas market.

At the interbank foreign exchange market, the local currency opened at 74.18 and witnessed an intra-day high of 74.08 and a low of 74.26 against the US dollar in day trade.

The local unit finally settled at 74.14 a dollar, down 8 paise over its previous close. On Tuesday, the rupee had settled at 74.06 against the greenback.

“The Indian rupee depreciated amid strong dollar and muted domestic markets. Dollar gained strength on the back of a surge in US treasury yields. Yields are rising on expectation that the US Federal Reserve will start tapering its bond purchases before the end of the year and possibly begin raising interest rates next year,” said Raj Deepak Singh, Head-Derivatives – ICICI Securities.

A jump in commodity prices has also fuelled worries over short-term inflation pressures.

Furthermore, investors remained vigilant ahead of speeches of major central banks to get hints on their future monetary stance.

“Sharp downside was prevented on persistent FII inflows and as crude oil dipped from its high. Rupee may trade in the range of 73.90 to 74.40 in the next couple of sessions,” Singh noted.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.06 per cent higher at 93.82. Meanwhile, Brent crude futures, the global oil benchmark, declined 0.61 per cent to $78.61 per barrel.

On the domestic equity market front, the BSE Sensex ended 254.33 points or 0.43 per cent lower at 59,413.27, while the broader NSE Nifty declined 37.30 points or 0.21 per cent lower at 17,711.30.

Meanwhile, foreign institutional investors were net sellers in the capital market on Tuesday as they offloaded shares worth Rs 1,957.70 crore, as per exchange data.

 

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NARCL may not hit this year’s fiscal outgo, says DBS Research, BFSI News, ET BFSI

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India’s bad bank is unlikely to impact this year’s fiscal outgo, according to a report by DBS Research.

The transfer of assets from banks to the National Asset Reconstruction Company Ltd (NARCL) will be in the form of ‘contingent liability’, which will be invoked when there is a shortfall upon resolution or liquidation.

Also read: Banks may sell Rs 1 lakh crore of fraud-hit loans to NARCL, ARCs

The transfer is likely to free up capital for banks, and price discovery is likely to be addressed by bad assets being bought at net book value, the report said

However, gross Non Performing Assets are likely to correct to the scale, while net NPAs will be a little changed.

Reform fine tuning, such as the announcement of the bad bank, strong external buffers, domestic equity outperformance and improving fiscal math have been positive for India’s economic narrative.

Also read: What are NARCL and IDRCL? How do they work and what is the plan?

India’s financial markets, including rupee, are no longer a part of the fragile five pack of economies, even as the US Federal Reserve prepares to taper its purchases of securities and bonds.

During the taper tantrum episode in 2013, India was part of the “Fragile Five,” representing a group of emerging market economies which were running weak external accounts and had poor cover for the external funding.

Compared with 2013, the rupee will be more resilient when the US Fed tapers asset purchases this time. The brokerage expects the Indian Rupee to hold its COVID-19 range of Rs 72-77 per US dollar into 2022.

India’s fiscal performance has been surprising this year, with the deficit reaching only 21.3% in April-July of the budgeted estimate, lower than 103% in April-July 2020, DBS Research said.

Revenues are outpacing expenditure, with net tax revenues at 34% in April-July, against 12.4% a year ago, and non-tax revenues at 58%, against 6.4% last year.

The onset of the third COVID-19 wave is likely to be less fatal as the economy seems to be having a better shock absorption capacity, the research said.

According to the report, employment, power consumption, and other indicators have reached pre-pandemic levels, benefiting from lower curbs but levelling off at highs into September.

However, this is unlikely to upgrade India’s overall sovereign rating. DBS Research expects ratings to be status quo.



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Rupee inches 8 paise higher to 73.75 against US dollar in early trade

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The Indian rupee appreciated 8 paise to 73.75 against the US dollar in opening trade on Tuesday, tracking positive domestic equities.

Forex traders said rupee is trading in a narrow range as weakness of Asian currencies, firm crude oil prices and strong dollar weighed on the domestic unit.

At the interbank foreign exchange, the rupee opened at 73.79 against the dollar, then edged higher to 73.75, up 8 paise over its previous close.

On Monday, the rupee had settled at 73.83 against the US dollar.

Dolla index rises

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.06 per cent to 93.44.

The Indian rupee opened on a flat note this Tuesday morning against the dollar, tracking the strength of the greenback and strong crude oil prices, Reliance Securities said in a research note.

Moreover, most emerging market and Asian currencies have started weaker this Tuesday morning and will weigh on sentiments, the note added.

Meanwhile, foreign institutional investors were net sellers in the capital market on Monday as they offloaded shares worth ₹594.63 crore, as per exchange data.

On the domestic equity market front, the BSE Sensex was trading 16.19 points or 0.03 per cent higher at 60,094.07, while the broader NSE Nifty advanced 24.75 points or 0.14 per cent to 17,879.85.

Meanwhile, global oil benchmark Brent crude futures rose 0.79 per cent to $80.16 per barrel.

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Rupee slips 5 paise to 73.73 against US dollar in early trade

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The Indian rupee edged lower by 5 paise to trade at 73.73 against the US dollar in opening deals on Monday due to fresh demands for dollar from banks and importers.

Though, a sustained bull run in the domestic equity market and dollar’s weakness against key rivals overseas lent some support to the rupee and checked its further fall, analysts said.

At the interbank foreign exchange, the rupee opened on a weak note at 73.70 and slid further to 73.73 as the trade progressed, logging a loss of 5 paise against the greenback over its previous close.

On Friday, the Indian currency had closed 4 paise down at 73.68 against the US dollar.

Dollar index

The dollar index, which gauges the greenback’s strength against a basket of six currencies, fell by 0.11 per cent to 93.22.

On the domestic equity market front, the BSE Sensex was trading 114.73 points or 0.19 per cent higher at 60,163.20. Similarly, the NSE Nifty was trading 23.25 points or 0.13 per cent up at 17,876.45.

Meanwhile, global crude oil benchmark Brent futures advanced 1.19 per cent to $79 per barrel.

Foreign institutional investors were net buyers in the capital market on Friday as they purchased shares worth ₹442.49 crore, as per exchange data.

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Rupee Coop Bank depositors oppose DICGIC decision to pay Rs 5 lakh to account holders of stressed coop banks

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Rupee Cooperative Bank, headquartered in Pune, has been under strict banking restrictions because of mounting debt.

A group of people claiming to represent the interests of account holders and depositors of Rupee Cooperative Bank has opposed the decision taken by the Deposit Insurance and Credit Guarantee Corporation (DICGC) to pay depositors of 21 stressed cooperative banks a sum of Rs 5 lakh within 90 days.

The DICGC has said that, following the amendment of the DICGC Act, it will make payments to depositors within 90 days. Besides PMC, the large banks include Rupee Cooperative Bank, Kapol Cooperative Bank, Maratha Coop Bank, and City Coop Ban, all from Maharashtra. Depositors in these banks have been waiting for years for their money. RBI had placed the banks under its all-inclusive directions, which included restrictions on withdrawal of deposits.

Dhananjay Khanzode, one of the depositors of the Rupee Cooperative Bank, said that depositors should be given their entire amounts and not just Rs 5 lakh since they have been waiting for years for their money. He asked depositors to wait for a month since the decision of the Bombay High Court is still awaited. The Rupee Cooperative Bank depositors had filed a civil writ petition with the Bombay High Court, seeking release of their deposits and action against the current administrators of the bank.

Khandzode said that he would approach depositors of the other stressed banks as well to jointly tackle this issue.

DICGIC has said that banks will have to submit a claim list by October 15 and update the position as of November 29 with principal and interest in a final updated list.

Rupee Cooperative Bank, headquartered in Pune, has been under strict banking restrictions because of mounting debt.

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Rupee slumps 26 paise to close at 73.74 against US dollar, BFSI News, ET BFSI

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MUMBAI: The Indian rupee fell by 26 paise to close at 73.74 (provisional) against the US dollar on Monday, tracking a strong American currency in the overseas market and muted trend in domestic equities.

At the interbank foreign exchange market, the local currency opened at 73.82 and finally settled for the day at 73.74 a dollar, down 26 paise over its previous close.

In the previous session on Friday, the rupee had settled at 73.48 against the US dollar.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.27 per cent higher at 93.44.

“The Indian rupee started the week on back foot as markets are in a risk-averse mood, triggered by the worries over the Chinese property developer Evergrande’s debt crisis,” said Dilip Parmar, Research Analyst, HDFC Securities.

“Volatility buyers are active in the forex markets as this week will witness fourteen central banks, apart from crucial FOMC, rate decisions and elections in Canada and Germany,” Parmar said.

The INR/USD pair is expected to find resistance around 74 while hold support at 73.40, he noted.

Brent crude futures, the global oil benchmark, fell 1.79 per cent to USD 73.99 per barrel.

On the domestic equity market front, the BSE Sensex ended 524.96 points or 0.89 per cent lower at 58,490.93, while the broader NSE Nifty declined 188.25 points or 1.07 per cent to 17,396.90.

Foreign institutional investors were net buyers in the capital market on Friday as they purchased shares worth Rs 1,552.59 crore, as per exchange data.



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