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Informist, Wednesday, Feb. 12, 2025

By Sourabh Kumar

MUMBAI – Erasing the day's gains, the rupee ended Wednesday slightly lower against the dollar as importers rushed to purchase the greenback to take advantage of lower dollar/rupee levels, dealers said. However, the Reserve Bank of India is likely to have intervened in the currency market by selling dollars, which prevented further fall in the rupee, dealers said. 

"The central bank sold (dollars) today as well, and that is why the rupee was up in the morning, but importers quickly rushed to the market to buy dollars," a dealer with a foreign bank said.

After moving in a range of nearly 46 paise, the Indian currency settled at 86.8925 a dollar Wednesday after closing at 86.8275 a dollar Tuesday. The rupee opened Wednesday at 86.4750 a dollar. Later in the day, the rupee came under pressure due to a slight fall in most other Asian currencies.

The Reserve Bank of India intervened in the foreign exchange market for the third trading day in a row to support the rupee, dealers said. Before selling dollars in the spot market, the central bank is also likely to have intervened in the offshore non-deliverable forwards market. "They were there in the NDF too, which is what explains the lower opening (of dollar/rupee) today also," a dealer with a private bank said. The rupee traded around 86.70 a dollar in the offshore NDF market about 10 minutes before the opening of the onshore market at 0900 IST.

After opening sharply higher, the rupee briefly rose further to touch an over-two-week high of 86.4600 a dollar. This attracted a lot of importers, including oil marketing companies, who raised their demand for dollars, putting pressure on the rupee, dealers said. 

Some banks also bought the greenback for foreign fund outflows, which put further pressure on the Indian currency, dealers said. The Nifty 50 and the BSE Sensex closed 0.1% and 0.2% down, respecively, Wednesday. So far this year, overseas investors have net sold $9.57 billion of domestic equities.

Due to the sudden and aggressive intervention by the RBI this week to support the rupee, most traders refrained from placing large bets, as they were unsure of the day's movement in the dollar/rupee, dealers said. The central bank has ramped up its support for the rupee significantly this week, with dealers estimating that the RBI may have sold nearly $15 billion in the spot market together on Monday and Tuesday.

The dollar index remained steady during the day ahead of the release of US inflation figures. The index, which measures the strength in the greenback against a basket of six major currencies, was at 107.89 at 1530 IST against 107.92 Tuesday and 108.33 Monday. The core CPI in the US is expected to have increased marginally to 0.3% in January after rising 0.2% the month before, according to analyst estimates in a Dow Jones poll. The headline inflation in the US is also expected to rise 0.3% after rising 0.4% in December.

A slight easing in crude oil prices supported the rupee, dealers said. As crude oil is a major commodity imported by India, a fall in its prices reduces the country's import bill, reducing the pressure on the domestic currency, dealers said. Oil prices fell as comments by US Federal Reserve Chair Jerome Powell indicated slower rate cuts this year, suggesting expectations of a slower pick-up in demand. In prepared remarks to Congress, Powell said the central bank should not cut rates hastily.

Prices also fell as reports indicated a rise in US crude oil stocks last week. Crude oil stocks in the US, the world's biggest oil producer and consumer, is likely to have risen by 9.4 million barrels in the week ending Saturday, according to a report by Reuters. At 1530 IST, the April Brent Crude contract on the Intercontinental Exchange was $76.27 per barrel, against $77.00 per barrel Tuesday and $75.87 per barrel Monday.

FORWARDS

The premium on the one-year dollar/rupee forward contract ended steady Wednesday as some importers purchased dollars for forward delivery, which offset the downward pressure from a rise in the benchmark 10-year US Treasury yield, dealers said. Importers had purchased forward dollars, anticipating a fall in the Indian currency, they said. 

Before recovering, the one-year forward premium fell to 2.16% in early trade, on an annualised basis. However, as the rupee came under constant pressure in the spot market, importers started buying forward dollars, dealers said.

While importers are likely to continue with dollar purchases, dealers anticipate forward premiums to either remain at currenct levels or to come down, as they expect the RBI to sell forward dollars intermittently.

At 1530 IST, the premium on the one-year exact-period dollar/rupee forward contract was 192.15 paise, against 189.87 paise Tuesday. On an annualised basis, the premium was 2.19%, similar to Tuesday's close of 2.19%.

OUTLOOK

On Thursday, the rupee will take cues from the movement of the dollar index and the Chinese yuan, dealers said. Market participants will assess any tariff-related statements by US President Donald Trump and the potential impact on global trade, they said. They will also be cautious against placing large bets due to aggressive RBI's intervention in the currency market.

Dealers expect banks to purchase the greenback on behalf of importers, noting a relatively lower dollar/rupee level, and on expectations that the rupee will fall in the coming weeks. They also expect foreign portfolio investors to continue to withdraw funds from the Indian equity market due risk-averse sentiment, which may also put the local currency under pressure. 

During the day, the rupee is seen in a range of 86.40-87.00 a dollar, with strong technical support pegged at 87.00 a dollar.

India Rupee - World FX: Euro up after EU indicates retaliatory tariffs on US

MUMBAI – The euro was up 0.1% against the US dollar after European Commission President Ursula von der Leyen said the bloc would retaliate with counter-measures against the 25% tariff on steel and aluminium imports that US President Donald Trump said would be applicable from Mar. 12.

The dollar index was steady ahead of the US inflation for January, due later in the day. After falling on Tuesday, the dollar index recovered and was steady on Wednesday after US Federal Reserve Chair Jerome Powell Tuesday said the central bank is in no rush to cut benchmark rates again.

The core CPI in the US is expected to have increased marginally to 0.3% in January after rising 0.2% the month before, according to analyst estimates in a Dow Jones poll. The headline inflation is also expected to rise 0.3% after rising 0.4% in December. At 1507 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 107.99 against previous close of 107.92 and 108.33 on Monday. 

The Japanese yen fell 0.7% against the dollar as Bank of Japan Governor Kazuo Ueda failed to provide a clear direction on the future course of rate hikes, which market was anticipating. The central bank would conduct monetary policy, taking into account risks from higher food prices, the governor said Wednesday.

The Australian dollar was down 0.2% against the US currency on increased expectation that the Reserve Bank of Australia may cut rates by 25 basis points at its next meeting on Feb. 18. Tracking a fall in the Australian dollar, the New Zealand dollar was down 0.2% against the greenback. The currencies of Australia and New Zealand are linked due to their close bilateral trade relations.

The Canadian dollar was down 0.1% while the Swiss franc was up 0.2%. The pound sterling was steady against the greenback.  (Gowri Lakshmi)

India Rupee: Premium steady; importers' fwd dollar buys offset rise in US yld

MUMBAI – The premium on the one-year dollar/rupee forward contract was steady on Wednesday as some importers purchased dollars for forward delivery, which offset the downward pressure from a rise in the benchmark 10-year US Treasury yield, dealers said. Importers purchased forward dollars, anticipating a fall in the Indian currency, they said. 

"There has not been much movement in forwards today, but some importers did book forwards, and that is essentially why it (forward premiums) rose after falling in the morning," a dealer with a private bank said.

The yield on the 10-year benchmark US Treasury note rose by four basis points Tuesday after comments by US Federal Reserve Chair Jerome Powell cast some uncertainty around the movement in interest rates. In prepared remarks to the Congress, Powell said the central bank should not hastily cut rates. This exerted downward pressure on premiums.

Before recovering, the one-year forward premium fell to 2.16% in early trade, on an annualised basis. However, as the rupee came under constant pressure in the spot market, importers started buying forward dollars, dealers said. In the spot market, the rupee was trading at 86.8850 a dollar at 1434 IST after opening at 86.4750 a dollar. On Tuesday, the Indian currency had closed at 86.8275 a dollar.

"Similar to spot movement after RBI's aggressive intervention, forward premiums had also come down, and forwards are mostly driven by importers right now," the dealer with the private bank said.

While importers are likely to continue with dollar purchases, dealers anticipate forward premiums to either remain at currenct levels or to come down, as they expect the RBI to sell forward dollars intermittently. The RBI is likely to keep on selling dollars for forward delivery intermittently to offset or at least minimise the impact of its spot dollar sales on rupee liquidity. 

The one-year exact period dollar/rupee forward premium was 192.00 paise at 1449 IST after closing at 189.87 paise on Tuesday. On an annualised basis, the premium was 2.19%, steady from Tuesday's close.  (Sourabh Kumar)

India Rupee: Technical Levels for rupee - Feb 12

MUMBAI – At 1230 IST, the rupee was at 86.8400 per dollar. At 0900 IST, the rupee was at 86.4750 a dollar against its previous close of 86.8275. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Sourabh Kumar)

India Rupee: Erases all gains as importers buy dollars; RBI dlr sales support

MUMBAI - The rupee erased all its gains against the dollar as banks purchased dollars, on behalf of importers, who wanted to take advantage of the relatively lower dollar/rupee levels, dealers said. However, the Reserve Bank of India's active intervention through dollar sales supported the Indian currency, they said.

"Importers just rushed in, that probably weighed on rupee, and exporters have exited and not active anymore," said a dealer at a private bank. "RBI is selling dollars, but they have probably become passive than what we saw earlier,".

The Indian unit fell to a low of 86.9050 a dollar during the day due to dollar demand from importers, dealers said. However, the RBI stepped in through dollar sales around 86.90 a dollar, which supported the rupee, they said.

Some oil marketing companies also bought dollars, wary of a rise in crude oil prices amid rising geopolitical tensions in West Asia, which put the rupee under pressure, dealers said. At 1200 IST, the April Brent crude contract on the Intercontinental Exchange was $76.73 per barrel, compared to the close of $77.00 per barrel on Tuesday and $75.87 per barrel on Monday.

Earlier in the day, the rupee jumped to a high of 86.4600 a dollar due to the central bank's intervention through dollar sales and owing to a fall in the dollar index, dealers said.

For the rest of the day, the rupee is seen moving in a range of 86.20-87.00 against the dollar. Dealers see strong technical support for the Indian unit at 87.00 a dollar. (Gowri Lakshmi)

India Rupee - Asia FX: Mixed ahead of US CPI data; fall in dlr index supports

MUMBAI – Asian currencies showed a mixed trend on Wednesday ahead of the release of the US consumer price index data for January, due later in the day. Market participants also await more concrete details regarding potential trade tariffs by US President Donald Trump.

The dollar index eased on Tuesday, erasing the tariff-driven gains following a rise in the euro. The euro strengthened after European Commission head Ursula von der Leyen said the bloc would retaliate with counter-measures against the US' 25% tariff hike on steel and aluminium imports. This supported the Asian currencies. 

The core US CPI is expected to have increased marginally to 0.3% in the previous month, according to analysts' estimates in a Reuters poll. At 1007 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 108.05, compared to the previous close of 107.92 and 108.33 on Monday.

The Philippines peso was flat against the dollar on Wednesday ahead of the central bank's policy outcome, due Thursday. The South Korean won and the Chinese yuan too traded flat against the dollar.

The Thai baht was down 0.2% against the dollar. However, the losses were limited due to gains in domestic equities. At 0950 IST, the benchmark index, the Stock Exchange of Thailand, was up 1.1%. Taiwan dollar was down 0.1% tracking a fall in domestic equities. At 0949 IST, the benchmark index, the TAIEX, was down 0.3%. 

The Malaysian ringgit traded flat against the dollar. Traders await Malaysia's gross domestic product for the quarter ended December, due Friday. The GDP is expected to have softened 4.8% on quarter, from 5.3% in the previous quarter, as per analysts.  (Gowri Lakshmi)

India Rupee: Sharply up on RBI's likely dollar sales, fall in dollar index

MUMBAI – The rupee was sharply higher against the dollar Wednesday as some public-sector banks sold the greenback, likely on behalf of the Reserve Bank of India, dealers said. The central bank likely intervened in the offshore non-deliverable forwards market as well before the spot market opened, which supported the local unit. 

"There is active selling (of dollars) in the spot market. Before the market opened, they (RBI) were pretty aggressive in selling. It is possible the 85 big figure (85-per-dollar) will also be tested," said a dealer at a state-owned bank. The rupee was trading around 86.70 a dollar in the offshore NDF market 10-15 minutes before the opening of the onshore market at 0900 IST. However, it opened at 86.4750 a dollar in the domestic spot market, thanks to the RBI's aggressive intervention in the offshore NDF market. 

"It's wastage of FX reserves. Intervening this much just to kill speculatory positions, does not make sense. This is coming at a high cost!" said a dealer at a foreign bank. The central bank has ramped up its support for the rupee significantly this week, with dealers estimating that the RBI may have sold nearly $15 billion in the spot market together on Monday and Tuesday,

The rupee also got support from a fall in the dollar index. The greenback erased some of its tariff-driven gains on Tuesday ahead of the US inflation print for January due later in the day. The core CPI is expected to have increased marginally to 0.3% in the previous month, according to analyst estimates in a Reuters poll. 

At 0940 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 108.05, compared to the previous close of 107.92 on Tuesday and 108.33 on Monday.

However, gains in the Indian currency were capped as some banks purchased the greenback on behalf of importers, who wanted to take advantage of the lower dollar/rupee levels, dealers said. "Importers are buying (dollars) at all levels. They have been buying on every dip (in dollar/rupee) ever since it breached 87 (per dollar)," a dealer at another state-owned bank said. 

During the day, the rupee is seen moving in a range of 86.10-86.80 against the dollar. Dealers see strong technical resistance for the Indian unit at 86.30 a dollar. (Gowri Lakshmi)

India Rupee: Expected range for rupee - Feb 12

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

(Pratiksha)

End

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

Edited by Rajeev Pai

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