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Informist, Friday, Feb. 14, 2025

By Gowri Lakshmi

MUMBAI – The rupee ended at its highest level in two weeks against the dollar on Friday, posting its biggest weekly gain in nearly two years, as the dollar index fell to a near two-month low after US President Donald Trump delayed the implementation of reciprocal tariffs, dealers said. Some public sector banks steadfastly sold dollars, likely on behalf of the Reserve Bank of India, which also supported the domestic currency, they said.

"There was continuous supply (of dollars) and they (RBI) heavily protected at 86.90 (a dollar) during the day. Seemed like they wanted to keep the rupee's end at a higher note for the week," a dealer at a private bank said.

The rupee appreciated 0.7% against the dollar this week, primarily owing to the central bank's aggressive intervention in the domestic spot market. The RBI likely sold almost $20 billion to support the rupee this week, according to dealers.

After moving in a range of 11 paise during the day, the rupee ended at 86.8225 against the dollar, as against 86.8975 Thursday. Most other Asian currencies also rose against the greenback, which aided the rupee. Other Asian currencies rose between 0.1-0.6%, with the South Korean won being the best performer amongst its peers.

The rupee opened slightly higher at 86.8600 against the dollar as the dollar index slumped on Thursday after the White House said reciprocal tariffs on other nations would not be implemented immediately. Trump on Thursday directed his team to make plans for reciprocal tariffs on every country that imposes taxes on US imports. The implementation of the reciprocal tariffs will, however, be delayed till at least April, which boosted expectations that there might be room for countries to negotiate.

The dollar index also fell as some components of the producer price data on Thursday signalled that core PCE inflation, the Federal Reserve's preferred measure, is likely to be lower than previously expected in January. The PCE data is due Feb. 28. 

Trump announced the reciprocal tariffs hours before Indian Prime Minister Narendra Modi met him at the Oval Office for talks. While speaking at a press briefing along with Modi on Thursday, the US President termed India as one of the countries with the highest tariff in the world, adding that reciprocal tariffs are the fair way to go. This weighed on sentiment for the Indian currency, dealers said. 

The rupee was also weighed by a dollar demand by importers, who continued to buy dollars noting the relatively lower dollar/rupee levels. "Importers were active, especially at 86.83 levels, in early trade. Most importers are still buying because they do not expect the rupee to be at this level next week," a dealer at a state-owned bank said. 

As importers stepped up their dollar purchases, the rupee was dragged to the day's low of 86.8975 a dollar, immediately after which some public sector banks stepped in with dollar sales, likely on behalf of RBI, dealers said. PSU banks sold dollars at around 86.89, which prevented the local currency from falling beyond the key 87-per-dollar mark, they said. Dealers also noted that the nature of the central bank's intervention was not as aggressive as seen earlier this week. 

The rupee was also weighed as banks purchased the greenback on behalf of portfolio investors, according to some dealers. So far in February, FPIs have sold $2.19 billion worth of shares from the domestic equities market. The Nifty 50 and BSE Sensex ended 0.4% and 0.3% lower, respectively. 

The dollar index declined further during European trade, following which the rupee jumped to the day's high of 86.7850 a dollar. At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 106.92, compared to the previous close of 107.07 and 107.97 on Wednesday. The dollar index fell to 106.83 during the day, its lowest level since Dec. 18. 

FORWARDS 

Premiums on the dollar/rupee forward contracts ended down across tenors on Friday as the Reserve Bank of India likely sold dollars for forward delivery, maturing in January, dealers said. The RBI likely sold forward dollars to offset the impact of its spot dollar sales on rupee liquidity, they said.

Meanwhile, some banks purchased the greenback for forward delivery on behalf of importers, noting the appreciation in the rupee, which supported the premiums, dealers said.  

At 1530 IST, the premium on the one-year exact-period dollar/rupee forward contract was 188.16 paise, against 192.00 paise Thursday. On an annualised basis, the premium was 2.17%, compared with Thursday's close of 2.21%.

OUTLOOK

On Monday, the rupee will closely track movement in the dollar index after the release of the US retail sales data due later in the day, dealers said. The rupee may also take cues from the movement in the Chinese yuan and crude oil prices, they said. Market participants will also keep a close eye on any trade and tariff-related announcements by the US. 

Dealers expect banks to continue purchasing dollars on behalf of importers, who fear the rupee will depreciate in the coming weeks. They also expect foreign portfolio investors to continue withdrawing funds from the Indian equity market, which may put further pressure on the local currency.

"Sooner or later 88 (a dollar) will be tested. The whole appreciation we saw this week probably is to limit the pace of the rupee's depreciation. We can see the rupee likely falling back to 87 next week," a dealer at a private bank said. 

During the day, the rupee is seen in a range of 86.50-87.00 a dollar, with strong technical resistance pegged at 86.50 a dollar.

India Rupee - World FX: Dlr falls to near 2-mo low as Trump delays tariffs

MUMBAI – The dollar index fell to a near two-month low on Friday after reports that US President Donald Trump delayed the implementation of the reciprocal tariffs he had announced on Thursday. Trump had directed his team on Thursday to formulate plans to impose reciprocal tariffs on every country that imposes tariffs on imports from the US. However, the implementation of these reciprocal tariffs are delayed until Apr. 2, which immediately led to expectations that countries may have more room to negotiate.

On Thursday, the dollar index had slumped after some components of a producer price report hinted at easing in the country's inflation in January. Data released Thursday showed that producer prices in the US rose 0.4% in January, after an upwardly revised 0.5% rise in December. On a yearly basis, the producer price index advanced 3.5%. The core personal consumption expenditure data, which is the preferred gauge of the Federal Reserve's inflation, is due Feb. 28. 

At 1507 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 106.87, compared to the previous close of 107.07 and 107.97 on Wednesday. The dollar index fell to 106.85 in early European trade, the lowest since Dec. 18. Market participants are now waiting for US retail sales data later in the day. The Canadian dollar was up 0.3%.

The Australian dollar was up 0.3% against the greenback due to a fall in the dollar index. However, gains in the currency were limited as the Reserve Bank of Australia is expected to cut its benchmark rate next week. The Australian central bank is anticipated to cut rates by 25 basis points to 4.10% on Tuesday, according to a Reuters poll. Tracking a rise in the Australian unit, the New Zealand dollar was up 0.3%. 

The euro was up 0.2% against the greenback ahead of the release of eurozone's Oct-Dec flash GDP estimate. The pound sterling was up 0.2% against the greenback. The Japanese yen was up 0.2% against the US dollar. The country's Economy Minister Ryosei Akazawa said Friday that the country would respond appropriately to US reciprocal tariffs.

The Swiss Franc was also up 0.1% against the US currency. The gains were limited after Swiss National Bank board member Petra Tschudin's comment that the central bank must be willing to move rates in negative to efficiently control the strength in the national currency. "If necessary, it allows us to steer the rate differential also in a low-interest environment in a way that the franc becomes less attractive than other currencies and therefore doesn't appreciate excessively," she said in an interview, published Friday.  (Gowri Lakshmi)

India Rupee: Steady as likely RBI dollar sales offset importers' dollar buys

MUMBAI – The rupee erased almost all gains from earlier in the day and was largely steady against the dollar on Friday after state-owned banks stepped in with dollar sales, likely on behalf of the Reserve Bank of India, which offset the impact of importers' dollar purchases, dealers said. The RBI likely sold dollars at around 86.89 per dollar level, which supported the local currency, they said.

The rupee rose to a high of 86.8300 earlier in the day. Following this, banks rushed to purchase the greenback on behalf of importers, to take advantage of the relatively lower dollar/rupee levels, dealers said. They expect the Indian unit to fall below the 87-per-dollar mark in the near term. "These are still attractive levels for importers. The buying (of dollars) sense is there, they will continue to do so," a dealer at a state-owned bank said. 

Some dealers said that banks likely bought dollars on behalf of foreign portfolio investors, who continue to exit the Indian stock market. This exerted pressure on the local unit. At 1221 IST, the benchmark indices, the Nifty 50 and the BSE Sensex, were down 0.9% and 0.7%, respectively. So far in February, FPIs have sold $2.19 billion worth of shares from the domestic equities market. 

However, as soon as the rupee hit the day's low of 86.8975, the central bank stepped in to sell the greenback, likely to prevent the Indian unit from falling beyond the 87-per-dollar mark. "Supply (of dollars) from the central bank is there," a dealer at a public sector bank said. "Though they are protecting the 86.90 (per dollar) level heavily, the aggression of the dollar sales have come down." 

For the rest of the day, the rupee is seen moving in a range of 86.60-87.00 against the dollar. Dealers see immediate technical support for the Indian unit at 86.90 a dollar. (Gowri Lakshmi)

India Rupee: Technical Levels for rupee - Feb 14

MUMBAI – At 1104 IST, the rupee was at 86.8850 per dollar. At 0900 IST, the rupee was at 86.8600 a dollar against its previous close of 86.8975. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Pratiksha, Gowri Lakshmi, and Sourabh Kumar)

India Rupee - Asia FX: Most up after dollar index slumps to over 2-week low

MUMBAI – Most Asian currencies traded higher against the dollar on Friday as the dollar index slumped to an over two-week low after the White House on Thursday said reciprocal tariffs by the US on other nations would not be implemented immediately. 

US President Donald Trump on Thursday directed his team to make plans for reciprocal tariffs on every country that imposes taxes on US imports. The implementation of the reciprocal tariffs will, however, be delayed till at least April, which boosted expectations that there might be room for countries to negotiate.

The dollar index also fell as some components of the producer price data on Thursday signalled that core PCE inflation, the Federal Reserve's preferred measure, is likely to be lower than previously expected for January. The PCE data is due Feb. 28. At 0955 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 107.14, compared to the previous close of 107.07 and 107.97 on Wednesday. The dollar index fell to 107.00 earlier in the day, its lowest level since Jan. 27. 

The South Korean won was up 0.3% against the US unit. South Korea's acting President Choi Sang-mok earlier in the day said the country will thoroughly review non-tariff barriers and other implications to respond to the US' plan to introduce reciprocal tariffs. "The impact of the reciprocal tariff measures may not be huge on our economy, as tariff rates are low due to the Korea-US Free Trade Agreement," Choi said. "However, given that the US said it would also assess non-tariff barriers including value-added taxes and taxes on digital services, it is necessary to monitor the situation." 

The Philippines' peso was up 0.2% after the Philippines' central bank, Bangko Sentral ng Pilipinas, unexpectedly held rates steady at 5.75% on Thursday. Market participants had widely expected the central bank to lower its interest rates by 25 basis points. The central bank said it would consider maintaining status quo at the next meeting as well amid global uncertainties.

The Indonesian rupiah was up 0.5% against the dollar, the most among its peers, while the Malaysian ringgit was up 0.4% against the greenback. The Taiwan dollar was up 0.1%. 

Bucking the trend, the Chinese yuan traded flat against the greenback. On Thursday, the People's Bank of China said it would assess global economic factors and vulnerabilities and adjust its monetary policy at an appropriate time to boost the domestic economy. China's central bank will "choose the opportunity to adjust and optimize the intensity and pace of policies based on domestic and foreign economic and financial conditions," it said in a quarterly monetary policy report. 

The Thai baht was also flat against the dollar. Data showed that the consumer confidence index hit an eight-month high in January, primarily driven by the economic stimulus efforts of the governement. The consumer confidence index rose to 59.0 in January from 57.9 in December. However, the index was lower than the crucial benchmark of 100, indicating that the economic recovery is progressing slowly.  (Gowri Lakshmi)

India Rupee: Up as dlr index hits over 2-week low; importers' dlr buys weigh

MUMBAI – The rupee was slightly higher against the dollar as the dollar index slipped to an over two-week low in early trade after the White House on Thursday said reciprocal tariffs by the US on other nations would not be implemented immediately, dealers said. 

US President Donald Trump directed his team on Thursday with setting up plans for reciprocal tariffs on every country taxing US imports. However, a White House official said that the tariffs were not going to be implemented immediately and may be imposed within weeks as Trump's team studies bilateral tariff and trade relationships, reports said. The dollar index also fell as components of January's producer price report on Thursday hinted at easing inflation in the world's largest economy. 

"The Dollar Index has experienced a sharp breakdown below the 107.70 level, moving towards 107. If the trend persists, it could decline further towards the 106–105.50 range," Amit Pabari, managing director at CR Forex, said in a note. At 0926 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 107.10, compared to the previous close of 107.07 and 107.97 on Wednesday. The dollar index fell to 107.00 earlier in the day, its lowest level since Jan. 27. 

However, dampened sentiment among investors after Trump's statement on reciprocal tariffs on India on Thursday weighed on the rupee. Speaking at a press briefing along with Prime Minister Narendra Modi, the US President termed India as one of the highest tariff countries in the world. "India charges more tariffs than any other country. It's hard to sell in India because they have very strong tariffs...Whatever India charges us, we'll charge them...Reciprocal tariffs are the fair way to go," he said. 

Gains in the Indian currency were also limited as some banks rushed to buy dollars on behalf of importers, who wanted to take advantage of the relatively lower dolla/rupee levels, dealers said. "The buy on dip (in dollar/rupee) sentiment is here to stay. The 87 (a dollar) mark will happen in some time, if not today, next week," a dealer at a private bank said. 

Dealers expect the Reserve Bank of India to step in through dollar sales at around 86.90 a dollar, like it has in the past two days, to prevent the rupee from falling beyond the key 87-per-dollar mark.

"I am sure they (RBI) would not want to let their hardwork go to waste, and will try to keep 87 (a dollar) away for some time," said a dealer at a state-owned bank. "There should be resistance around 86.90 (a dollar)."

During the day, the rupee is seen moving in a range of 86.50-87.00 against the dollar. Dealers see strong technical resistance for the Indian unit at 86.50 a dollar. (Pratiksha)

India Rupee: Expected range for rupee Feb 14

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:

(Pratiksha)

End

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

Edited by Saji George Titus

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