More Stories

Informist, Tuesday, Jan. 21, 2025

By Gowri Lakshmi

MUMBAI – The rupee erased all gains against the dollar Tuesday as banks persistently purchased the greenback on behalf of importers and foreign portfolio investors, dealers said. "FPI selling (of shares) continues to weigh on the currency. Panic around (US President Donald) Trump's policies has also set in, with the dollar index recovering after the initial fall," a dealer at a private bank said. 

After moving in a relatively wide range of 31 paise during the day, the rupee ended steady at 86.5775 against the greenback, compared to its previous close of 86.5675 on Monday. 

A fall in the offshore Chinese yuan, which declined 0.1% against the greenback, also put pressure on the Indian currency, dealers said. The fall in Indian equities too weighed on the rupee, they said.

The rupee opened sharply higher against the dollar at 86.2800, the highest level since Jan. 13, as the dollar index fell after Donald Trump did not signal any immediate tariff measures after being sworn-in as the US President on Monday. The rupee opened higher by 28 paise compared with the previous day's close, the largest opening gap since Jun. 3.

The dollar index, which fell on Monday, recovered on media reports that the new Trump administration was considering imposition of higher tariffs on Canada in the immediate future. At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 108.71, compared to its previous close of 108.07 on Monday and 109.41 on Friday.

After opening, the rupee fell over 10 paise within a few minutes, as banks persistently purchased the greenback on behalf of importers, dealers said. They said importers aggressively bought dollars, noting the relatively lower dollar/rupee levels, and as they feared a sharper depreciation in the local unit in weeks ahead, given the uncertainty pertaining to Trump's tariff and trade policies.

"The morning rush today was so intense, within minutes the rupee was pulled to 86.30 levels by importers and then further dragged to even the 40 (86.40) levels right after," a dealer at a private bank said.

Some dealers speculated that the rupee may have also been weighed as banks may have purchased dollars, likely on behalf of the Reserve Bank of India, to shore up its foreign exchange reserves.

The rupee was further weighed as banks bought the greenback on behalf of overseas investors who withdrew funds from the domestic stock market. Both the benchmark indices, the Nifty 50 and the BSE Sensex ended in the red, falling 1.4% and 1.6%, respectively. So far this month, foreign investors have net sold shares worth $4.95 billion from Indian equities.

FORWARDS 

Premiums on the dollar/rupee forward contracts were down across tenures as the Reserve Bank of India likely sold the greenback for forward delivery, dealers said. They said the central bank sold forward dollars for maturity in July and August.

The RBI's recent interventions in the spot market by selling dollars to prevent sharp volatility in the dollar/rupee puts further pressure on the liquidity deficit, dealers said. On Monday, the net liquidity injected by the RBI--a proxy for systemic liquidity conditions--rose to INR 2.36 trillion against INR 1.94 trillion on Sunday, as per data from the RBI.

A fall in the 10-year benchmark US Treasury yield limited the downward movement in premiums.

At 1530 IST, the premium on the one-year exact-period dollar/rupee forward contract was 203.35 paise, against 207.00 paise on Monday. On an annualised basis, the premium was at 2.34%, against Monday's close of 2.39%. 

OUTLOOK

On Wednesday, the rupee will take cues from the movement in the dollar index and offshore Chinese yuan, dealers said. They also said traders will closely assess developments in West Asia, which may impact crude oil prices. Dealers expect banks to continue purchasing the greenback, on behalf of importers, wary of a further fall in the domestic unit. 

However, dealers expect the Reserve Bank of India to intervene in the foreign exchange market if the rupee comes under immense pressure, to prevent the rupee from falling sharply and to curb any excessive market volatility. 

During the day, the rupee is seen in a range of 86.50-86.80 a dollar, with strong technical support pegged at 86.70 a dollar.

India Rupee - World FX: Euro falls as ECB member Villeroy indicates rate cut

MUMBAI – The euro fell 0.6% against the US dollar as European Central Bank governing council member Francois Villeroy de Galhau indicated a rate cut at the upcoming meeting. "There's a plausible consensus that we will go on acting at each meeting which we have successfully practised since September," Villeroy said.

The Canadian dollar was down 0.9% against the greenback ahead of the release of December CPI data later on Tuesday. Consumer prices are expected to have advanced 1.8% on year last month. The Canadian currency was also under pressure after reports indicated that the new Trump administration was considering the imposition of higher tariffs on its northern neighbour in the immediate future. However, further details on the matter were not available.

The New Zealand dollar was down 0.8% against the greenback after data on Tuesday showed that the country's services purchasing managers index declined to 47.9 in December from 49.5 in November, the tenth consecutive month of contraction. A reading above 50 indicates expansion in the sector.

The Australian dollar was down 0.7% against the US currency, as the dollar index recovered after falling to a two-week low of 107.92. US President Trump was quoted stating, "If we make a TikTok deal and China doesn't approve it, we could maybe put tariffs on China." The statement comes after Trump signed an executive order granting a 75-day extension to the ban on social media platform. Any change in the Chinese economy directly influences the currency of Australia due to their close bilateral trade relations.

The dollar index fell to a two-week low on Monday after Trump did not signal any new tariff measures immediately. At 1517 IST, the dollar index, which measures the strength of the dollar against six major currencies, was at 108.70, compared to its previous close of 108.07 on Monday and 109.41 on Friday. The dollar fell to 107.92 on Monday, the lowest level since Jan. 7. The Swiss franc was down 0.5%. 

The pound sterling was down 0.7% against the greenback after data on Tuesday showed a softening labour market. The International Labour Organisation unemployment rate rose to 4.4%, against analysts' estimate of 4.3%.

The Japanese yen was down 0.2% against the greenback due to strength in the dollar index. However, losses in the currency were limited after reports that the Bank of Japan was likely to raise its interest rates if Trump's policies do not cause immediate market volatility. The central bank of Japan is scheduled to begin its monetary policy meeting on Jan. 23.  (Gowri Lakshmi)

India Rupee: Off highs as banks persistently buy dollars for importers, FPIs

MUMBAI - The rupee came off its earlier highs against the dollar, erasing most of its gains, as banks persistently purchased dollars on behalf of importers and foreign portfolio investors, dealers said. The Indian currency rose to a high of 86.2800 a dollar earlier in the day, tracking weakness in the dollar index. 

"The rupee has come down now, though it seemed quieter in the morning. Importers just rushed to buy dollars, which pulled the rupee to 86.40 levels," a dealer at a private bank. Dealers said banks continuously purchased dollars on behalf of importers, who wanted to take advantage of the relatively lower dollar/rupee levels. Banks also purchased the greenback on behalf of foreign portfolio investors, looking to pull out funds from the Indian stock market, which weighed on the rupee, dealers said.

At 1238 IST, the benchmark indices, the Nifty 50 and the BSE Sensex were down 1.0% and 0.9%, respectively. So far this month, FPIs have net withdrawn $4.95 billion worth of shares from the domestic equity market.

Further, a slight recovery in the dollar index also exerted pressure on the Indian unit, they said. The dollar index rebounded slightly after some reports said that US President Donald Trump suggested the US could impose tariffs on Canada and Mexico in the immediate future, though there were no further details. At 1320 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 108.44, compared to 108.07 on Monday and 109.41 on Friday.

Some dealers speculated that banks may have purchased dollars, likely on behalf of the Reserve Bank of India, to replenish its foreign exchange reserves. For the rest of the day, the rupee is seen moving in a range of 86.20-86.60 against the dollar. Dealers see immediate technical support for the Indian unit at 86.60 a dollar.  (Gowri Lakshmi)

India Rupee: Technical Levels for rupee - Jan 21

MUMBAI – At 1205 IST, the rupee was at 86.5100 per dollar. At 0900 IST, the rupee was at 86.2825 a dollar against its previous close of 86.5675. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Pratiksha and Gowri Lakshmi)

India Rupee - Asia FX: Most up as dlr weakens on no swift tariffs by Trump

MUMBAI – Most Asian currencies were higher against the dollar in early trade Tuesday as the dollar index fell after Donald Trump, who assumed the US presidential office on Monday, refrained from announcing any tariff measures on his first day in office, as was expected by investors. The dollar index had fallen to a two-week low of 107.92 on Monday, after which it recovered slightly. 

The dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 108.37 at 0841 IST against 108.07 on Monday and 109.41 on Friday. Reports suggested that the new US administration will establish a taskforce to investigate the potential impact of tariffs on Canada, Mexico, and China before implementing any broad measures. This also cooled the recent surge in the dollar index. A report by The Wall Street Journal said that Trump directed agencies to scrutinise the US's relationship with China and neighbouring countries.

The South Korean won was up 0.1% against the dollar, the least amongst its Asian peers, as a Wall Street Journal poll said that South Korea's economy likely expanded 0.2% on quarter in Oct-Dec, slower than the Bank of Korea's forecast of a 0.5% rise.

The Indonesian rupiah and Taiwan dollar were up 0.3% each against the greenback. The Philippines peso rose 0.2% against the dollar. The Malaysian ringgit was up 0.5% against the greenback as the central bank of the country is expected to keep the policy rate unchanged at 3.0% on Wednesday. The Thai baht rose 0.2% against the US currency.  (Sourabh Kumar)

India Rupee: Sharply up as dollar weakens on lack of swift tariffs by Trump

MUMBAI – The rupee traded higher against the dollar Tuesday as the dollar index slumped to a two-week low after Donald Trump assumed office late Monday, and did not announce any swift measures on tariffs immediately, dealers said. 

"There will be volatility. The movement will depend on the statements Trump makes now. If it supports EMs (emerging markets), then we can see an uptick (in rupee movement). If it's about tariffs, then the rupee will crumble down," a dealer at a state-owned bank said. 

The dollar index plummeted to a two-week low on Monday as Trump and his team did not signal any immediate action on imposing higher tariffs on his first day in office, easing fears of an immediate trade war. The index recovered slightly after reports that Trump suggested the US could impose tariffs on Canada and Mexico in the immediate future, though it lacked further details.

Though the index recovered slightly, it remained broadly weak, which lent support to the rupee. At 0910 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 108.27, compared to its previous close of 108.07 on Monday and 109.46 on Friday. The dollar index fell to a two-week low of 107.92 on Monday. 

All other Asian currencies traded higher on Tuesday, providing some cushion to the domestic unit as well, dealers said. They said a rise in domestic equities also supported the local unit. At 0919 IST, both the benchmark indices, the Nifty 50 and the Sensex were higher.

However, banks rushed to purchase the greenback on behalf of importers, which put the rupee under pressure, dealers said. Importers purchased the greenback, taking advantage of relatively lower dollar/rupee levels. "Importers are not yet in a panic mode, but they are buying, mostly buying on dips," a dealer at a public sector bank said. 

During the day, the rupee is seen moving in a range of 86.20-86.50 against the dollar. Dealers see immediate technical resistance for the Indian unit at 86.45 a dollar.  (Gowri Lakshmi)

India Rupee: Expected range for rupee - Jan 21

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

(Sourabh, Pratiksha 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.