More Stories

Informist, Monday, Jan. 13, 2025

By Gowri Lakshmi

MUMBAI – The rupee fell the most in nearly 2 years to end at a record closing low, breaching the psychologically crucial 86 per dollar mark. The rupee plummeted against the dollar during the day, triggering stop-losses as the dollar index surged to an over two-year high, dealers said. Dollar purchases by banks on behalf of importers and overseas investors also weighed on the rupee, they said.

Dollars sales by banks, likely on behalf of the Reserve Bank of India, and exporters provided some cushion to the local currency, they said.

"(The move to) 86 (a dollar) was expected, but we only foresaw a fall of 20–25 paise, this kind of movement was not expected at all," a dealer at a private bank said. "At this point, the central bank has let the rupee test the waters," he added. The rupee fell 61 paise, posting the biggest fall since Feb. 6, 2023.

In comparison with its Asian peers, the rupee performed the worst, falling 0.7% against the greenback. After hitting a record low of 86.5900 a dollar, the Indian currency settled at 86.5750 a dollar against Friday's close of 85.9650 a dollar. Other Asian currencies fell between 0.1%-0.5% against the greenback.

At the open, the rupee slumped to below the 86 per dollar mark to 86.2050 against the greenback due to a surge in the dollar index, and as the Reserve Bank of India was not as active in the market as earlier to prevent a sharp depreciation in the rupee, dealers said.

The dollar index edged higher after the US non-farm payrolls data showed a strong and resilient US labour market, indicating that the US Federal Reserve would opt for a slow pace of monetary policy easing this year.

The non-farm payrolls data showed an addition of 256,000 jobs in December, against the estimate of 160,000 a Reuters poll. The unemployment rate dipped to 4.1% compared to the forecast of it remaining unchanged at 4.2%. Market participants are now waiting for the US consumer price index data, due Wednesday, to get further cues on the rate-cut outlook by the US Fed.

At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was 110.05 compared to the previous close of 109.64 on Friday and 109.16 on Thursday. Earlier, the dollar index rose to 110.18, the highest level since November 2022.

With the soaring dollar index, banks rushed to purchase the greenback on behalf of importers as soon as the market opened. Importers significantly increased their demand for dollars on fears of a further sharp fall in the rupee, dealers said. Amongst importers, oil marketing companies' demand for dollars also increased due to fears of a further rise in crude oil prices.

Oil prices rose to an over 4-month-high after US President Joe Biden announced fresh sanctions on Russia, aiming to hit every stage of Moscow's oil production and distribution. At 1530 IST, the March Brent Crude contract on the Intercontinental Exchange was $80.94 per barrel, compared to its previous close of $79.76 per barrel on Friday and $76.92 per barrel on Thursday. 

Amid a fall in the rupee, some banks sold the greenback on behalf of exporters, who wanted to take advantage of the relatively higher dollar/rupee levels, which provided some cushion for the domestic unit, dealers said. However, some exporters waited for even a further fall in the rupee. "Exporters were waiting for the big figure (86 per dollar) to be breached first, given the pace of depreciation for the rupee for the obvious reasons, exporters are willing to wait," a dealer at a public-sector bank said.

Further, some banks sold the greenback, likely on behalf of the Reserve Bank of India, which prevented the rupee from falling more, dealers said. "Unlike earlier, the RBI intervention has been mild. The dollar sales were likely one large amount at a particular level (86.58 a dollar) than a phased sales at every dip (in rupee)," a dealer at a private bank said. The RBI also likely intervened when the rupee was at around 86.39 a dollar. 
 

Despite the RBI intervention, the rupee fell further, triggering stop losses at around 86.50, dealers said. The rupee was pulled further to its lifetime low of 86.5900 during the day as foreign portfolio investors continued to exit the Indian equity market, dealers said. So far in January, $1.9 billion worth of shares have been sold by overseas investors. 

Dealers said the aggressiveness of RBI's intervention through dollar sales has likely come down due to depleting foreign exchange reserves. India's foreign exchange reserves fell to an over 11-month low of $634.59 billion in the week ended Jan. 3. 

FORWARDS 

The premium on the one-year dollar/rupee forward contract ended steady as dollar purchases on behalf of importers for forward delivery offset the downward pressure from a rise in the benchmark 10-year US Treasury yield, dealers said.

Importers demanded dollars, noting a sharp fall in the rupee, dealers said. Forward premiums also received a boost from a relatively wide liquidity deficit, dealers said. On Friday, the net liquidity injected by the RBI--a proxy for systemic liquidity conditions--rose to INR 2.25 trillion from INR 2.01 trillion on Thursday.

A few dealers speculated that premiums on the forward dollar/rupee contract came under downward pressure probably because of the Reserve Bank of India's forward dollar sales, likely to nullify its spot interventions and avoid pushing out rupee liquidity.

At 1530 IST, the one-year exact period dollar/rupee forward contract was 219.11 paise against Friday's 219.21 paise. On an annualised basis, the premium was 2.53% against 2.55% on Friday. 

OUTLOOK 

On Tuesday, the rupee will take cues from the movement in the dollar index and crude oil prices, dealers said. Any fall in the offshore Chinese yuan will also weigh on the rupee, they said. Dealers expect banks to continue purchasing the greenback on behalf of importers, who are wary of a further fall in the domestic currency. The rupee may also come under pressure from continued foreign fund outflows, as overseas investors are likely to keep withdrawing funds from the Indian equity market, dealers said.

"The huge selling from equity is definitely one of the major reasons for the rupee's fall. Until some settling down is done there, the rupee cannot see stability. With this trend continuing and him (US President-elect Donald Trump) coming in next week, we can easily be 87 a dollar in the near term and even 88 a dollar by March," a dealer at a state-owned bank said. Donald Trump is scheduled to assume office on Jan. 20.

Dealers also expect banks to sell dollars, likely on behalf of the RBI, to prevent the rupee from falling sharply and to curb excessive market volatility. "Now it is a very difficult situation to predict anything," a dealer with a foreign bank said. "The RBI is not at all active as it used to be earlier. I am afraid the rupee might even fall to 87 in a few days, because you don't have reserves to protect it."

Data released after market hours showed that India's CPI inflation moderated to a four-month low of 5.22% in December from 5.48% in November. At 5.22%, CPI inflation in December was slightly below expectations. According to an Informist poll, headline inflation was seen at 5.3% in December. A fall in inflation is likely to keep the pressure on the Indian rupee, dealers said.

During the day, the rupee is seen in a range of 86.20-86.60 a dollar, with strong technical support pegged at 86.60 a dollar.

India Rupee - World FX: Dlr index hits over 2-yr high on upbeat US jobs data

MUMBAI – The dollar index surged to an over two-year high in early European trade, extending Friday's gains. The dollar index strengthened after the non-farm payrolls data revealed a strong and resilient US labour market, pointing to the possibility of a slower pace of rate cuts by the US Federal Reserve this year. 

The non-farm payroll data showed an addition of 256,000 jobs in December, as against 160,000 in a Reuters poll. Meanwhile, the unemployment rate dipped to 4.1% compared to the forecast of remaining unchanged at 4.2%.

At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was 110.05 compared to the previous close of 109.64 on Friday and 109.16 on Thursday. Earlier, the dollar index risen to 110.18, the highest level since November 2022.

Market participants are now waiting for the release of the US consumer price index, due Wednesday. Analysts estimate the headline inflation to have risen 2.8% in December from 2.7% a month before, as per a Reuters poll. 

The pound sterling was down 0.5% against the greenback, while the euro was down 0.6%. The euro came under further pressure as some European Central Bank officials indicated more rate cuts by the ECB. ECB Chief Economist Philip Lane told an Austrian newspaper that the ECB can ease policy further this year, but must find a middle ground. 

In an interview with Bloomberg Television, ECB Governing Council Member Olli Rehn said the central bank should continue lowering borrowing costs no matter what the US Fed does. 

The Swiss franc and Canadian dollar were down 0.1% each against the greenback. The Japanese yen was up 0.4%. Market participants expect the Bank of Japan to hike interest rates in the upcoming monetary policy meeting scheduled for Jan. 23–24. The Australian dollar fell 0.1% and the New Zealand dollar was down 0.2% against the greenback.  (Gowri Lakshmi)

 India Rupee: Premium erases losses on bks' forward dollar buys for importers

NEW DELHI – The premium on the one-year dollar/rupee forward contract erased some losses as banks purchased the greenback for forward delivery on behalf of importers, dealers said. Importers demanded dollars, noting a sharp fall in the rupee, dealers said. The rupee hit a record low of 86.5850 a dollar on Monday, falling 62 paise against the US currency in a day, the most since Feb 6, 2023. This sharp fall led to fear among importers about further fall in the rupee in the coming days, leading to a rise in demand for dollars for forward delivery, dealers said.

A rise in the yield on the benchmark 10-year US Treasury note pushed forward premiums lower in most tenures, dealers said. A few dealers speculated that premiums on the forward dollar/rupee contract might have also fallen in early trade due to the Reserve Bank of India's forward dollar sales, likely to nullify its spot interventions and avoid pushing out rupee liquidity. On Friday, the net liquidity injected by the RBI--a proxy for systemic liquidity conditions--rose to INR 2.25 trillion from INR 2.01 trillion on Thursday.

"There is definitely panic in the spot market, and when the dollar is going strong, you can see paying pressure," a dealer with a state-owned bank said. "Some sort of buy/sell (by the RBI) pulled premiums down, apart from the rise in UST (US Treasury yields)."

The one-year dollar/rupee forward premium hit a near two-week low of 2.47% in early trade, on an annualised basis. The yield on the 10-year US Treasury note rose nine basis points to close at 4.77% on Friday after data showed a stronger-than-expected labour market in the US. This gave rise to expectations that the total quantum of rate cuts this year by the US Federal Reserve may be lower than previously thought.

After falling to a near two-week low, the one-year forward premium recovered, driven by importers' dollar purchases for forward delivery, dealers said. They said this demand for dollars drove premiums on the one-month and two-month exact period forward contract up on Monday. Forward premiums also received a from a relatively wide liquidity deficit, dealers said.

Dealers say forward premiums will continue to be pushed higher in the coming weeks, especially as the uncertainty increases when US president-elect Donald Trump assumes office on Jan 20. This may result in a rise in forward premiums, they said. However, they add that a few banks might also sell dollars to take advantage of relatively higher premiums, limiting the rise.

At 1418 IST, the one-year exact period dollar/rupee forward contract was 218.23 paise against Friday's 218.96 paise. On an annualised basis, the premium was 2.52% against 2.55% on Friday.  (Sourabh Kumar)

India Rupee: Hits record low despite RBI's likely intervention as dlr surges

MUMBAI – The rupee slumped to a lifetime low of 86.4850 a dollar Monday as the dollar index hit a fresh over 2-year high and importers persistently bought the greenback, dealers said. This was despite likely dollar sales on behalf of the Reserve Bank of India, they said. The rupee has moved in a range of over 28 paise so far during the day, and has posted its biggest intraday fall since Dec. 27.

Dealers said the central bank's intervention was 'mild' in nature. "They (RBI) have been selling (dollars) at certain levels and smoothening the movement (in the rupee), but broadly, they are letting it go," said a dealer at a state-owned bank

The dollar index hit an over 2-year-high of 109.98 Monday, after the US non-farm payrolls data on Friday indicated a strong US labour market and a slower pace of rate cut cycle by the US Federal Reserve. The US non-farm payrolls data showed the US economy added 256,000 jobs in December, the highest in nine months, against an estimate of 160,000 rise in a Reuters poll. Meanwhile, the unemployment rate last month dipped to 4.1% compared to the forecast of it remaining unchanged at 4.2%.

"The rupee was already expected to breach 86 (a dollar) this month (January). Now that it's only a week before Trump's inauguration, the rupee may only find stability beyond 86.50 levels," a dealer at a private bank said.

At 1220 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 109.91 compared to the previous close of 109.64 on Friday and 109.16 on Thursday. Market participants are now waiting for the US CPI data, due Wednesday. 

"The dollar index shot up sharply after the jobs data, now we are waiting for the (US) CPI data. The dollar strengthening coupled with a depleting foreign exchange reserve is what pulled the rupee," a dealer at a private bank said. India's foreign exchange reserves fell to an over 10-month low of $634.59 billion in the week ended Jan. 3, data released by the RBI on Friday showed. 

Banks purchased the greenback on behalf of oil marketing companies and other importers who feared a further fall in the domestic currency, which weighed on the local unit. Importers bought dollars with a sense of "panic", noting the sharp fall in the rupee, they said. 

For the rest of the day, the rupee is likely to move in a range of 86.30-86.60 against the dollar. Dealers see immediate technical support for the Indian unit at 86.50 a dollar. (Gowri Lakshmi)

India Rupee: Technical Levels for rupee - Jan 13

MUMBAI – At 1229 IST, the rupee was at 86.4600 per dollar. At 0900 IST, the rupee was at 86.2050 a dollar against its previous close of 85.9650. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Sourabh Kumar and Pratiksha) 

India Rupee - Asia FX: Most down as dlr strengthens post strong US jobs data

NEW DELHI – Most Asian currencies were down against the dollar in early trade Monday due to strength in the dollar index. The dollar index, which measures the strength of the greenback against a basket of six major currencies, rose to a 26-month high on Friday after the US jobs report showed a robust labour market.

The data, released Friday, showed that non-farm payrolls in the US increased by 256,000 in December, more than the expectation of 160,000 jobs in a Reuters poll. This showed that the US labour market was strong, raising hopes of an even shallower rate cut by the US Federal Reserve this year. 

The Philippines peso fell 0.5%, while the Indonesian rupiah fell 0.6% against the greenback. The Taiwan dollar was down 0.4% against the greenback. 

The Thai baht and Malaysian ringgit were down 0.3% each against the greenback. In an interview with Bloomberg, Malaysia's finance minister showed confidence in the country's economy, saying GDP growth will surpass 5% in 2025, which limited the fall in the nation's currency.

On the other hand, the South Korean won was up 0.2% against the greenback after falling sharply. Media reports indicated that the country's central bank might have intervened in the foreign exchange market to support the local currency and prevent it from falling to more than a decade-low level.  (Sourabh Kumar)

India Rupee: Slumps; falls past 86/$1 on strong dlr index, importer dlr buys

MUMBAI – The rupee fell below 86 per dollar, hitting a lifetime low of 86.3950 against the greenback, due to strength in the dollar index and as banks purchased the greenback for importers, dealers said. They said the Reserve Bank of India did not aggressively intervene in the market to prevent a sharp fall in the Indian currency. The rupee has moved in a relatively wide range of 21 paise so far in the day.

"The market opened at the big figure. We were expecting the RBI to intervene, but they are almost entirely absent today (Monday)," a dealer at a private bank said. The rupee came under immense pressure as the dollar index surged to an over two-year high after the non-farm payrolls data showed the US economy added 256,000 jobs in December, against analysts' estimate of 160,000, as per Reuters. Meanwhile, the unemployment rate dipped to 4.1% compared to the forecast of it remaining unchanged at 4.2%. The data reinforced a stronger labour market and hopes of shallow rate cuts by the US Federal Reserve in 2025.

At 0954 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was 109.89 compared to the previous close of 109.64 on Friday and 109.16 on Thursday. The dollar index spiked to 109.97 on Friday, the highest level since November 2022. 

Further, banks purchased the greenback on behalf of importers, who feared a further sharp fall in the rupee. "Buy on dips is what importers are doing, they are back in the panic-buy situation," a dealer at a brokerage firm said. Amongst importers, oil marketing companies' demand for dollars increased due to a rise in crude oil prices. They feared oil prices may rise further. Crude prices rose to a near four-month high after US President Joe Biden announced fresh sanctions against Russian oil producers. At 0951 IST, the March Brent crude contract on the Intercontinental Exchange was at $81.40 per barrel, compared to its previous close of $79.76 per barrel on Friday and $76.92 per barrel on Thursday. 

Dealers said banks also purchased the greenback on behalf of foreign portfolio investors who were looking to withdraw funds from the Indian equity market, which weighed on the rupee. At 0955 IST, benchmark indices, the Nifty 50 and BSE Sensex, were both down 0.8%.

However, banks sold the greenback on behalf of some exporters, who wanted to take advantage of the higher dollar/rupee levels, which limited the fall in the rupee, dealers said. Others waited for a further fall in the rupee, they said. "Exporters were waiting for the rupee to breach 86 (per dollar), now they (exporters) see a sharper fall, so most of them are willing to wait further," a dealer at a state-owned bank said.

During the day, the rupee is likely to move in a range of 86.00-86.50 against the dollar. Dealers see immediate technical support for the Indian unit at 86.40 a dollar. (Gowri Lakshmi)

India Rupee: Expected range for rupee - Jan 13

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

(Pratiksha, Sourabh Kumar and Gowri Lakshmi)

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.