More Stories

Informist, Friday, Jan. 10, 2025

By Gowri Lakshmi

MUMBAI – The rupee ended at a record closing low against the dollar for the third consecutive trading session as the dollar index advanced to an over one-week high ahead of the US non-farm payrolls data, due later in the day, dealers said. However, state-owned banks' persistent dollar sales, likely on behalf of the Reserve Bank of India, ensured that the Indian currency did not test the psychologically-crucial 86-per-dollar mark, they said.

"We are seeing a gradual move towards 86 (a dollar). I don't think the market will be surprised at this point if it happens on Monday itself. I was prepared for it today," said a dealer at a big state-owned bank.

The rupee fell to a lifetime low of 85.9700 a dollar in the last leg of the trade and settled at 85.9650 a dollar, as against 85.8475 on Thursday. The rupee moved in a range of 12 paise during the day and fell 0.2% against the dollar this week.

The rupee opened largely steady against the greenback at 85.8750, but soon came under pressure as banks purchased the greenback to take advantage of the arbitrage opportunity with the non-deliverable forward rates, dealers said. The rupee was also weighed down by the strength in the dollar index, they said.

Dealers said banks continuously sold the greenback throughout the day, likely on behalf of the RBI, which prevented the rupee from touching the 86-per-dollar mark. "The central bank seems to be letting the rupee move toward 86 (per dollar) in a staggered manner rather than one sudden fall," a dealer at a private bank said. Some dealers pointed out that the RBI's likely dollar sales were not very aggressive in nature.

Banks also purchased the greenback on behalf of importers, who feared a further fall in the rupee going ahead, weighing on the local unit, dealers said. "Importers may have come at peace with the fact that the rupee is falling, but market participants have factored in the rupee falling to 86 before the Trump inauguration now. With all the US data being upbeat, 86 (a dollar) is just a matter of a few days now," a dealer at a private bank said. US President-elect Donald Trump is set to take office on Jan. 20.

The dollar index remained firm in early trade and rose further during European trade ahead of the US non-farm payrolls data due later in the day. The economic data is expected to show an addition of 150,000 jobs in December, with the unemployment rate unchanged at 4.2%, according to a Reuters poll.

Data released on Thursday showed that the weekly claims for unemployment insurance in the US fell 10,000 to a seasonally adjusted 201,000 for the week ended Jan. 4, the lowest figure since February 2024. A Reuters poll of economists had forecast the claims at 218,000. A decline in unemployment claims strengthened expectations of a shallow rate cut cycle by the US Federal Reserve in 2025, giving a boost to the dollar index. 

At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 109.15, compared to its previous close of 109.16 on Thursday and 109.01 on Wednesday. The dollar index rose to a high of 109.38 during the day, its highest level since Jan. 2.

The rupee was also weighed by banks' dollar purchases on behalf of foreign portfolio investors, who continued to withdraw funds from the Indian stock market, dealers said. So far this month, FPIs have pulled out almost $3.1 billion from the domestic market on a net basis. On Friday, both the benchmark indices, the Nifty 50 and the Sensex, ended 0.4% and 0.3% lower, respectively. 

With bets stacked up against the Indian currency, the rupee fell to a lifetime low of 85.9700 a dollar in the last 15 minutes of the session, only a whisker away from the psychologically important level of 86-per-dollar, dealers said.   

FORWARDS 

The premium on dollar/rupee forward contracts ended lower across tenures on Friday as the Reserve Bank of India likely sold dollars for delivery in three-, six-month and one-year forward contracts, dealers said. Dealers said the central bank likely sold dollars for forward delivery to nullify its spot interventions and avoid pushing out rupee liquidity.

On Thursday, the net liquidity injected by the RBI--a proxy for systemic liquidity conditions--rose to INR 2.01 trillion against INR 1.82 trillion on Wednesday.

A few banks also sold dollars for forward delivery, noting the relatively higher premium levels, dealers said. The one-year dollar/rupee forward premium hit a near-27-month high of 2.75% on Thursday. Some banks also purchased dollars for forward delivery to take advantage of the arbitrage opportunity between the dollar/rupee offshore non-deliverable forward and onshore levels, which aided the premiums, dealers said. 

At 1530 IST, the one-year exact period dollar/rupee forward contract was 218.96 paise against Thursday's 231.39 paise. On an annualised basis, the premium was 2.55% against Thursday's 2.69%.

OUTLOOK 

On Monday, the rupee will take cues from the movement in tje dollar index after the non-farm payrolls data due later in the day. Dealers expect the currency market to be volatile on Monday due to the likelihood of the dollar index surging further if the US jobs data is strong.

"If the non-farm payroll comes stronger, we could see the target of 86 (a dollar) being achieved on Monday itself," said Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP. "The range for Monday is expected at 85.80 to 86.10 with a risk to the upside."

Dealers expect importers to continue purchasing the greenback, fearing a further fall in the rupee, which is likely to weigh on the rupee. However, they expect the RBI to continue intervening through dollar sales to prevent the rupee from falling sharply and testing the psychologically-crucial level of 86-per-dollar. 

The rupee is seen in a range of 85.85-86.10 a dollar, with strong technical support pegged at 86.00 a dollar.

India Rupee - World FX: Dlr index rises to over 1-wk high ahead of econ data

MUMBAI – The dollar index rose to an over one-week high in early European trade, ahead of the US jobs data later in the day. The data is expected to show an addition of 150,000 jobs in December, with the unemployment rate unchanged at 4.2%, according to a poll by Reuters.

Data released on Thursday showed that weekly claims for unemployment benefits in the US fell 10,000 to a seasonally adjusted 201,000 in the week ended Jan. 4, the lowest since February 2024. A poll of economists by Reuters had forecast the claims at 218,000. The fall in unemployment claims increased expectations of shallow rate cuts by the US Federal Reserve in 2025, giving a boost to the dollar index. 

The dollar index also got a boost as Fed Governor Michelle Bowman and Kansas City Fed President Jeff Schmid supported the decision of the US Federal Open Market Committee, which hinted at fewer rate cuts this year than earlier, given the potential price rise and inflationary expansion under US president-elect Donald Trump. He is set to assume office on Jan. 20.

"We are currently pretty close to meeting our dual mandate of price stability and full employment, with inflation close to target and growth showing continued momentum, I believe we are near the point where the economy needs neither restriction nor support and that policy should be neutral," Schmid said at an event on Thursday. Bowman said she stands firm in her support for "a cautious and gradual approach" towards another rate cut.

At 1511 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 109.15, compared to its previous close of 109.16 on Thursday and 109.01 on Wednesday. The dollar index rose to a high of 109.38, the highest level since Jan. 2. The New Zealand dollar was down 0.3% against the US currency. 

The Japanese yen was down 0.2% after data on Friday showed that Japanese household spending declined 0.4% in November, which weighed on expectations of a hike in interest rates by the Bank of Japan. The central bank is scheduled to meet for its first monetary policy meeting of the year on Jan. 23-24.

The pound sterling extended losses from Thursday and was down 0.2% against the greenback due to weakness in its economy. Bank of England Deputy Governor Sarah Breeden Thursday said that recent data points suggested a gradual rate cut this year. The yield on British government bonds soared this week and drove the government's borrowing to the highest level in over 16 years, potentially forcing the British chancellor to cut spending and raise taxes in the Autumn Budget, reports said.

The euro was steady against the greenback, while the Australian dollar was down 0.2% against the US currency. The Canadian dollar and the Swiss franc were both down 0.1% against the US dollar.  (Gowri Lakshmi)

India Rupee: Premiums fall as RBI likely sells dollars for forward delivery

NEW DELHI – The premium on dollar/rupee forward contracts fell across tenures on Friday as the Reserve Bank of India is likely to have sold dollars for delivery in three-, six-month and one-year forward contracts, dealers said. 

"Some buy/sell is seen from the central bank amid the liquidity deficit and spot intervention," a dealer with a private bank said. Dealers said the central bank sold dollars for forward delivery, likely to nullify its spot interventions and avoid pushing out rupee liquidity.

On Thursday, the net liquidity injected by the RBI--a proxy for systemic liquidity conditions--rose to INR 2.01 trillion against INR 1.82 trillion on Wednesday. In the currency market, the rupee hit a record low of 85.9675 a dollar on Friday, with dealers saying the RBI intervened in the market through dollar sales. A rise in liquidity deficit in the banking system also limited the fall in forward premiums, dealers said.

A few banks also sold dollars for forward delivery, noting relatively higher premiums, dealers said. The one-year dollar/rupee forward premium hit a near-27-month high of 2.75% on Thursday. 

Further, premiums also came down across tenures, as the ongoing demand for forward dollars reduced on Friday ahead of the release of US jobs data. "Before jobs data, a lot of people are not taking any position, so there is some respite," a dealer with another private bank said.

Forward premiums have been rising in recent weeks due to persistent demand for dollars for forward delivery, noting a sharp fall in the rupee in the spot market, dealers said. Some banks also purchased dollars for forward delivery to take advantage of the arbitrage opportunity between the dollar/rupee offshore non-deliverable forward and onshore levels, dealers said. 

At 1453 IST, the one-year exact period dollar/rupee forward contract was 219.71 paise against Thursday's 231.39 paise. On an annualised basis, the premium was 2.56% against Thursday's 2.69%.  (Sourabh Kumar)

India Rupee: Remains tad down as dollar index at 1-wk high, importers buy dollars

 India Rupee: Remains tad down as dollar index at 1-wk high, importers buy dollars

MUMBAI – The rupee remained slightly lower against the dollar Friday as the dollar index rose to an over one-week high and as banks persistently purchased dollars on behalf of importers, dealers said. However, banks' dollar sales, likely on behalf of the Reserve Bank of India, limited losses for the domestic currency, they said. 

The dollar index rose further in European trade ahead of US non-farm payrolls later in the day. The data is expected to show the addition of 150,000 jobs in December, with the unemployment rate unchanged at 4.2%, according to a Reuters poll.

"The NFP (non-farm payroll) data is definitely going to be stronger. All their data recently has crossed the estimates. Their (the US) only concern is inflation," a dealer at a state-owned bank said. "Since the release (of the data) is after (Indian) market hours, we can expect the market to be volatile on Monday. Today, the movement seems to be restricted."

At 1345 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 109.26, compared to its previous close of 109.16 on Thursday and 109.01 on Wednesday. The dollar index rose to 109.38 during the day, its highest level since Jan. 2.

Banks continuously purchased the greenback on behalf of importers, wary of a sharp fall in the rupee, dealers said. So far into the new calendar year, the rupee has depreciated almost 0.4% against the dollar. 

The central bank likely sold dollars to prevent the Indian currency from hitting a record low, and to curb excessive market volatility, dealers said. The rupee fell to a low of 85.9300 a dollar during the day, just shy of its lifetime low of 85.9325. However, dealers said the RBI's likely intervention was 'mild' in nature. 

For the rest of the day, the rupee is likely to move in a range of 85.80-86.00 against the dollar. Dealers see immediate technical support for the Indian unit at 85.95 a dollar. (Gowri Lakshmi)

India Rupee: Technical Levels for rupee - Jan 10

NEW DELHI – At 1155 IST, the rupee was at 85.8925 per dollar. At 0900 IST, the rupee was at 85.8750 a dollar against its previous close of 85.8475. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Sourabh Kumar and Pratiksha)

India Rupee: Steady as likely RBI dollar sales offset strong dollar index

MUMBAI – The rupee was steady against the dollar Friday as banks' dollar sales, likely for the Reserve Bank of India, offset the impact of a strong dollar index, dealers said. However, banks' dollar purchases for importers and foreign portfolio investors weighed on the domestic unit, they said. 

"There has been heavy pressure on the rupee since yesterday (Thursday). There has to be intervention, without which the rupee wouldn't be holding these levels. Yesterday itself we saw how close we were to 86 a dollar," a dealer at a state-owned bank said. The rupee fell to a lifetime low of 85.9325 against the greenback on Thursday as the dollar index hovered near its one-week high, hit on Wednesday.

The dollar index continued to advance ahead of the release of US non-farm payrolls data, due later in the day. The data is expected to show an addition of 150,000 jobs in December, with the unemployment rate unchanged at 4.2%, according to a Reuters poll. The dollar index also got a boost after data released on Thursday showed that weekly claims for unemployment insurance fell 10,000 to a seasonally adjusted 201,000 for the week ending Jan. 4, the lowest figure since February 2024.

At 0953 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 109.20, compared to its previous close of 109.16 on Thursday and 109.01 on Wednesday. 

The rupee was also weighed down as banks purchased the greenback on behalf of importers and overseas investors, dealers said. Dealers said the fear of the rupee soon breaching the 86-per-dollar level continues to influence importers' demand for dollars. Further, FPIs continued to exit the Indian stock market and dealers expect FPI outflows to continue till February. 

"FPI outflows have started to go out in bulk again in the last few weeks. We can expect some stability or a pause after we (India) cut rates," a dealer at a public sector bank said. Dealers said some market participants expect the RBI to lower interest rates by a quarter percentage point at its next monetary policy meeting, scheduled in February. Some banks sold the greenback, likely on behalf of the RBI, at around 85.88-a-dollar levels, which prevented the rupee from falling sharply and curbed excessive market volatility. 

During the day, the rupee is likely to move in a range of 85.80-86.00 against the dollar. Dealers see immediate technical support for the Indian unit at 85.95 a dollar. (Gowri Lakshmi)

India Rupee - Asia FX: Mixed ahead of US jobs data; South Korean won down

NEW DELHI – Asian currencies were mixed against the dollar ahead of the release of the US jobs data for December. The data, scheduled to be released after Indian market hours, is expected to show an addition of 150,000 jobs in the US last month, with the unemployment rate unchanged at 4.2%.

If the data indicates a higher number of jobs in December, the dollar index may receive a further boost on strengthening hopes of more shallow rate cuts by the US Federal Reserve in 2025. The dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 109.19 at 0911 IST, against Thursday's 109.16 and Wednesday's 109.01.

Before Friday's data, market participants analysed the weekly claims for unemployment benefits, which fell 10,000 to a seasonally adjusted 201,000 for the week ended Jan. 4, the lowest figure since February 2024.

The South Korean won was slightly down against the greenback amid political uncertainty. The country's acting President Choi Sang-mok said on Friday that the government will make all the efforts to stabilise the economy, and will monitor financial markets around the clock, if needed. The Thai baht was down 0.1% against the greenback. 

The Taiwan dollar was steady as robust exports from the country offset the effect of a strong dollar index. Exports in December rose 9.2% year-on-year, against the forecast of 6.5% in a Reuters poll. 

The Indonesian rupiah was up 0.2% against the US dollar, supported by a rise in its benchmark stock index, the Jakarta Stock Exchange Composite. The index was up 0.7% in early trade. The Philippines peso and the Malaysian ringgit were both up 0.2% against the dollar.  (Sourabh Kumar)

India Rupee: Expected range for rupee - Jan 10

Following are the expected support and resistance levels for the rupee on Friday, as forecast by leading banks and brokerages in an Informist poll:

(Pratiksha, Gowri Lakshmi, and Sourabh Kumar)

End

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

Edited by Saji George Titus

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2025. All rights reserved.