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Informist, Friday, Jan. 24, 2025

 

By Sourabh Kumar and Pratiksha

 

MUMBAI/NEW DELHI – The rupee ended at its highest level in two weeks against the dollar, as the dollar index fell to an over five-week low after US President Donald Trump called for a cut in interest rates in the US in a speech to the World Economic Forum on Thursday, dealers said.

 

Moreover, Trump's comments in an interview that he "would rather not" have to impose tariffs on China and suggestion that a trade deal could be done with Beijing also weighed on the dollar index.

 

After moving in a range of little under 20 paise, the Indian currency settled at 86.2050 a dollar against Thursday's close of 86.4575 a dollar.

 

The Indian currency rose 0.3% against the dollar, while other Asian currencies gained 0.3-1.5% on Friday. The Malaysian ringgit was the best performer amongst its emerging market peers. The rupee rose 0.5% against the dollar this week.

 

The Indian currency started the day sharply higher against the dollar, tracking weakness in the US unit after Trump's comments. "With oil prices going down, I'll demand that interest rates drop immediately, and likewise they should be dropping all over the world," Trump said on Thursday.

 

The Indian unit also got a boost from a sharp rise in the Chinese yuan after Trump's comments sparked expectations that he would opt for a softer stance on tariffs on China, according to dealers. "We have one very big power over China, and that's tariffs, and they don't want them," he said. "And I'd rather not have to use it. But it's a tremendous power over China," Trump said. The onshore Chinese yuan rose 0.6% against the dollar on Friday.

 

The dollar index weakened further during European trade to an over five-week low, which further aided the Indian unit. Noting the weakness in the US unit, traders sold the greenback to cut their existing long dollar bets, dealers said. "A lot of longs (dollar bets) were cut till 86.20 (a dollar) at least," said a dealer at a private bank. "This much fall in DXY (dollar index) was not expected."

 

At 1530 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was 107.50 against 108.12 on Thursday and 108.28 on Wednesday. The index fell to 107.28 during the day, its lowest level since Dec. 18.

 

Some banks sold dollars on behalf of exporters, who feared the rupee might appreciate further in the coming days, which also boosted the Indian currency, dealers said. Exporters sold the greenback with a slight sense of panic, leading to stop-losses being triggered on long dollar bets around 86.20 a dollar, they said. Following this, the Indian currency touched the day's high of 86.1650 a dollar.

 

"Some stops were hit once 86.20 was touched," said a dealer at a private bank. "I think 86.00 should be the top for rupee, and then RBI may start absorbing (dollars)."

 

Meanwhile, some banks stepped in to buy the greenback on behalf of importers, who wanted to take advantage of the relatively lower dollar/rupee levels, which capped gains for the domestic unit, according to dealers. However, the dollar purchases on behalf of importers were not aggressive in nature on the expectation that the dollar index may weaken further from here on, they said. The dollar index has declined over 1.7% this week.

 

Dealers speculated that the Reserve Bank of India might have possibly bought dollars to replenish its foreign exchange reserves, which also limited gains for the Indian unit. India's foreign exchange reserves fell to a near 11-month low of $623.98 billion in the week ended Jan. 17.

 

	AT 1530 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	86.2050	86.3100	86.1650	86.3625	86.4575
1-year dlr/rupee fwd (paise)	197.42	199.00	199.00	194.00	198.50

 

FORWARDS

The premium on the one-year dollar/rupee forward contract ended slightly lower across most tenures as the RBI likely sold forward dollars for maturity in near-term contracts, dealers said.  The RBI likely conducted dollar/rupee buy-sell swaps to nullify its spot interventions and avoid pushing out rupee liquidity, they said.  A buy/sell swap entails buying dollars for immediate delivery and entering into a contract to sell these at a future date.

 

At 1530 IST, the premium on the one-year exact-period dollar/rupee forward contract was 197.42 paise, against 198.50 paise on Thursday. On an annualised basis, the premium was 2.29%, against Thursday's close of 2.30%.

 

Meanwhile, gains in the Indian currency prompted banks to buy dollars for forward delivery on behalf of importers, which limited fall in the premiums, dealers said.

 

An overnight rise in the benchmark 10-year US Treasury yield also pulled dollar/rupee forward premiums lower, dealers said. Premiums on the forward of a currency pair reflect the interest rate differential between the two countries.

 

OUTLOOK

On Monday, the rupee will take cues from the movement of the dollar index and Chinese yuan, dealers said. The local unit will also take cues from movement in crude oil prices, they said.

 

"If the dollar index falls more, there could be unidirectional movement in the rupee," said a dealer at a foreign bank. "If a few more sessions the rupee rises, we may see some sentiment shift happening around it."

 

If the dollar continues to weaken, dealers expect exporters to continue selling dollars on the expectation that the Indian unit may rise further in the coming days. However, dealers expect the RBI to step in through dollar purchases to restock its reserves if the Indian unit appreciates sharply. 

 

During the day, the rupee is seen in a range of 86.10-86.40 a dollar, with strong technical resistance pegged at 86.15 a dollar.

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India Rupee - World FX: Dollar index hits over 5-week low; euro surges 1%

 

	AT 1500 IST	HIGH	LOW	PREVIOUS
GBP/USD	1.2434	1.2439	1.2349	1.2352
EUR/USD	1.0508	1.0516	1.0412	1.0414
NZD/USD	0.5719	0.5722	0.5672	0.5674
AUD/USD	0.6327	0.6331	0.6279	0.6283
USD/JPY	155.2220	156.4120	154.8460	156.0500
USD/CAD	1.4323	1.4383	1.4316	1.4381
EUR/JPY	163.1090	163.2610	161.9240	162.5700
CHF/USD	1.1075	1.1079	1.1016	1.0988
EUR/CHF	0.9488	0.9496	0.9438	0.9450

 

NEW DELHI – The dollar index fell to its lowest level in over five weeks after US President Donald Trump called for the US Federal Reserve to cut interest rates at the World Economic Forum on Thursday in Davos, Switzerland. "With oil prices going down, I'll demand that interest rates drop immediately, and likewise they should be dropping all over the world," he said.

 

The dollar index was also weighed down by Trump's comments in a television interview on Thursday, where he expressed reluctance to impose tariffs on China, suggesting a trade war between the world's largest economies could be avoided. "We have one very big power over China, and that's tariffs, and they don't want them," he said. "And I'd rather not have to use it. But it's a tremendous power over China."

 

At 1500 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 107.38 against 108.12 on Thursday and 108.28 on Wednesday. 

 

Following weakness in the US unit, the euro jumped almost 1% against the dollar. Further, data released on Friday showed HCOB's preliminary composite eurozone Purchasing Managers' Index rose to 50.2 in January from December's 49.6, edging just above the 50 mark separating growth from contraction. This also boosted the euro. 

 

The pound sterling gained 0.7% against the dollar owing to a decline in the greenback. France's services sector shrank further in January, with the HCOB flash services PMI business activity index declining to 48.9 from 49.3 in December, below the 50.0 threshold that indicates growth.

 

The Japanese yen rose 0.6% against the greenback after the Bank of Japan hiked rates by 25 basis points Friday to 0.5%, bringing its policy rate to the highest level since 2008. The central bank also revised up its inflation forecasts, fuelling expectations of more rate hikes in the coming time. 

 

The Australian dollar and the New Zealand dollar rose 0.6% and 0.7% against the dollar, respectively, on expectations that Trump may opt for a softer stance on tariffs on China. Both the countries share close bilateral trade relations with the world's second-largest economy. (Pratiksha)

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India Rupee: 1-yr fwd premium near 1-mo low on likely RBI fwd dollar sales

 

	AT 1424 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	86.2025	86.3100	86.1700	86.3625	86.4575
1-year dlr/rupee fwd (paise)	195.00	199.00	199.00	194.00	198.50

 

MUMBAI – The premium on the one-year dollar/rupee forward contract fell to a near one-month low as the Reserve Bank of India likely sold forward dollars in near-term contracts, dealers said. The one-year dollar/rupee forward premium fell to 2.25%, the lowest since Dec. 27. Premiums on all other tenures were also down on Friday. 

 

At 1424 IST, the premium on the one-year exact-period dollar/rupee forward contract was 195.00 paise, against 198.50 paise on Thursday. On an annualised basis, the premium was 2.26%, against Thursday's close of 2.30%.

 

"RBI is doing buy/sell, and we are seeing that happening continuously," a dealer with a private bank said. The central bank sold dollars for forward delivery due to a widening rupee liquidity deficit, dealers said. On Thursday, the net liquidity injected by the RBI--a proxy for systemic liquidity conditions--rose to INR 3.16 trillion, the highest level in a year, against INR 2.88 trillion on Wednesday.

 

A rise in the benchmark 10-year US Treasury yield also pushed dollar/rupee forward premiums lower, dealers said. Premiums on the forward of a currency pair reflect the interest rate differential between the two countries.

 

After the Bank of Japan's rate hike on Friday, investors are awaiting the rate decision by the US Federal Open Market Committee on Wednesday and the European Central Bank on Thursday.  (Sourabh Kumar)

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India Rupee: Surges as dollar index falls post Trump's comments, yuan jumps

 

	AT 1410 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	86.2125	86.3100	86.1700	86.3625	86.4575

 

NEW DELHI – The rupee surged against the dollar as the dollar index hit an over five-week low after US President Donald Trump called for the US Federal Reserve to cut interest rates at the World Economic Forum on Thursday in Davos, Switzerland, dealers said. The Indian currency rose to 86.1700 a dollar, its highest intraday level since Jan. 10. 

 

Further, Trump's comments in an interview on Thursday fuelled expectations that he would opt for a softer stance on tariffs on China, which also weighed on the dollar index. Trump said he would rather not use tariffs on China and reach a trade deal with the world's second-largest economy. 

 

"Today is completely a dollar story for the rupee," said a dealer at a state-owned bank. "It looks like some more dollar weakness may start if Trump continues to give such news."

 

Weakness in the dollar index prompted traders to sell the greenback to cut existing long dollar bets, which aided the Indian currency, dealers said. At 1410 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 107.46 against 108.12 on Thursday and 108.28 on Wednesday. 

 

Moreover, appreciation in the Chinese yuan following Trump's remarks about tariffs on China also supported the local unit, as per dealers. The onshore Chinese yuan rose 0.6% against the dollar on Friday. 

 

Dealers said some banks sold dollars on behalf of exporters, who feared the rupee might appreciate further in the coming days, which also boosted the Indian currency. "Some kind of panic has set in amongst exporters. The kind of news that we are getting from Trump every day now is not pointing to a long term depreciation bias (in the rupee)," said a dealer at a private bank. 

 

However, some banks bought the greenback on behalf of importers, who wanted to take advantage of the relatively lower dollar/rupee levels, which capped gains for the domestic unit, according to dealers. However, the dollar purchases on behalf of importers were not aggressive in nature, they said. 

 

Dealers speculated that the Reserve Bank of India might have possibly bought dollars to replenish its foreign exchange reserves, which limited gains for the Indian unit. India's foreign exchange reserves fell to an over 10-month low of $625.87 billion in the week ended Jan. 10. 

 

For the rest of the day, the rupee is seen moving in a range of 86.15-86.40 against the dollar. They see technical resistance for the Indian unit at 86.15 a dollar. (Pratiksha)

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India Rupee: Technical Levels for rupee - Jan 24

 

MUMBAI – At 1217 IST, the rupee was at 86.2700 per dollar. At 0900 IST, the rupee was at 86.3100 a dollar against its previous close of 86.4575. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

 

Participants	S2	S1	R1	R2
State-owned bank	86.75	86.60	86.25	86.20
Private bank	86.60	86.50	86.20	86.00
Brokerage firm	86.80	86.65	86.20	85.80

 

(Sourabh Kumar and Pratiksha)

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India Rupee - Asia FX: Most up as dlr falls after Trump's call for rate cut

 

MUMBAI – Most Asian currencies rose in early trade as the dollar index fell after US President Donald Trump called for easing rates in the US. In a virtual speech at the World Economic Forum in Davos, Trump again brought up the imposition of tariffs, but didn't specify any details like before.

 

The dollar index, which measures the strength og the greenback against a basket of six major currencies, was at 107.98 at 0755 IST against 108.12 on Thursday and 108.28 on Wednesday. The dollar also came under pressure as the Japanese yen strengthened after the Bank of Japan raised its policy rate by 25 basis points to "around 0.5%". The dollar was down 0.6% against the Japanese currency.

 

Meanwhile, data on Thursday showed that US initial claims for state unemployment benefits increased 6,000 to a seasonally adjusted 223,000 for the week ended Jan. 18. Economists polled by Reuters had forecast 220,000 claims for the week. This also weighed on the dollar index.

 

The Philippines peso rose 0.5% against the greenback as the country's trade deficit narrowed to $4.14 billion in December from the previous month's figure of $4.85 billion. The Indonesian rupiah was also up 0.5% against the greenback.

 

The Thai baht and the Malaysian ringgit were both down 0.7% against the greenback. The Taiwan dollar was up 0.4% and the South Korean won was up 0.3% against the US dollar.

 

Market participants now look forward to the US Federal Open Market Committee's meeting outcome, due on Wednesday, and the European Central Bank's rate decision on Thursday.  (Sourabh Kumar)

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India Rupee: Sharply up as dollar index falls on Trump's call for rate cuts

 

	AT 0940 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	86.3025	86.3100	86.2625	86.3325	86.4575

 

MUMBAI – The rupee rose sharply against the dollar in early trade due to a fall in the dollar index, dealers said, adding that a rise in the Chinese yuan also helped the rupee's upward movement.

 

"While the dollar index has come down, the rupee is up also because the Chinese yuan has risen today after Trump's comments," a dealer with a state-owned bank said.

 

In an interview with Fox News on Friday, US President Donald Trump indicated that he would prefer not to impose tariffs on China, which gave a boost to the Chinese currency. The Chinese yuan rose 0.4% in early trade Friday.

 

The dollar index weakened after Trump said on Thursday that he would want the US Federal Reserve to cut rates, and the world to follow. Speaking virtually at the World Economic Forum in Davos, he again mentioned the imposition of tariffs, though again with lack of any concrete plan. The index, which measures the strength in the greenback against a basket of six major currencies, was 107.79 at 0934 IST against 108.12 on Thursday and 108.28 on Wednesday. 

 

The dollar index also came under pressure due to strengthening of the Japanese yen after Bank of Japan raised its policy rate by 25 basis points to 0.50%. The Japanese yuan was trading 0.5% higher against the US dollar after the policy announcement.

 

A fall in crude oil prices also supported the rupee, dealers said. Given that crude is a major commodity imported by India, a fall in its price reduces the country's import bill, easing pressure on the domestic currency. 

 

Oil prices fell after Trump said the Organization of the Petroleum Exporting Countries should lower prices of crude oil. At 0938 IST, the March Brent crude oil contract on the Intercontinental Exchange was at $78.14 per barrel, compared to its previous close of $78.29 per barrel and $79.00 per barrel on Wednesday.

 

Coming to domestic factors, demand for dollars from importers limited gains for the rupee, dealers said. They said importers purchased the greenback, taking advantage of relatively lower dollar/rupee levels. 

 

For the rest of the day, the rupee is seen moving in a range of 86.20-86.60 against the dollar. Dealers see technical resistance for the Indian unit at 86.25 a dollar.  (Sourabh Kumar)

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India Rupee: Expected range for rupee - Jan 24

 

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

 

PARTICIPANT	SUPPORT	RESISTANCE
State-owned bank	86.50	86.28
State-owned bank	86.50	86.20
Foreign bank	86.60	86.25
Foreign bank	86.60	86.25
Brokerage firm	86.60	86.20
Brokerage firm	86.50	86.20

 

 

 

 

 

 

 

 

 

(Sourabh Kumar and Pratiksha)

 

End

 

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

 

Edited by Ashish Shirke

 

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