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Informist, Friday, Feb. 21, 2025

By Gowri Lakshmi

MUMBAI –  The rupee erased all its gains and ended slightly lower against the dollar Friday as banks persistently purchased the greenback on behalf of oil marketing companies and other importers, dealers said. The Indian unit was also weighed down by dollar purchases on behalf of foreign portfolio investors, they said. 

"Importer demand (for dollars) has continued around these levels. Today's theme was just buying (of dollars), so none of the levels sustained," said a dealer at a foreign bank. 

A fall in the Chinese yuan also weighed on the rupee, according to dealers. The Chinese yuan fell 0.2% against the dollar. After touching a high of 86.4750 a dollar, the rupee settled at 86.7125, compared to its previous close of 86.6600. The rupee moved in a range of almost 30 paise during the day. The rupee, however, has gained 0.1% against the dollar this week.

The Indian currency opened sharply higher against the dollar Friday, tracking a fall in the dollar index, dealers said. The dollar index slipped to a low of 106.33 Thursday after data showed initial jobless claims in the US were higher than expected in the week ended Saturday. The initial jobless claims rose by 5,000 to a seasonally adjusted 219,000, against a forecast of 215,000 in a Reuters poll.

The dollar index was also weighed down as the Japanese yen surged to an over-11-week high in early trade after latest inflation data increased investors' hopes of another rate hike by the Bank of Japan. The dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 106.69 at 1530 IST, compared with 106.33 Thursday and 106.16 Wednesday.

Shortly after the spot market opened, the rupee came under pressure as banks rushed to purchase the greenback on behalf of importers who wanted to take advantage of the relatively lower dollar/rupee levels, dealers said. "We thought the rupee would rise above 86.40, but importers' pressure came and dragged it to 50 (86.50) and 60 (86.60) levels," said a dealer at a state-owned bank. "We did not see any supply (of dollars) at any level either."

The rupee pared most of the gains before the European trading session began as banks also purchased the greenback on behalf of foreign portfolio investors, who continued to exit the Indian markets, dealers said. So far in February, FPIs have withdrawn $3.09 billion from the domestic equity market on a net basis.

A fall in domestic equities also weighed on the rupee, according to some dealers. The benchmark indices, the Nifty 50 and the BSE Sensex, ended 0.5% and 0.6% lower, respectively, Friday. "As FPIs continued to sell equities and buy dollars and the dollar index went up, rupee started losing ground with possible buying by oil companies, importers, and FPIs, and with a small possibility of RBI (Reserve Bank of India) covering its short positions," said Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP.

Some dealers also speculated that some public-sector banks may have purchased dollars on behalf of the RBI at around 86.50 a dollar, which weighed on the Indian unit. Others said banks sold the greenback on behalf of exporters at around 86.75 a dollar, which provided support to the Indian currency. "I think a lot of exporters were unhedged and are now coming back since the RBI has been protecting 87 (a dollar)," said a dealer at a private bank. "The market has space both for importers and exporters now."

FORWARDS

The premiums on dollar/rupee forward contracts ended lower across tenures Friday as the RBI is likely to have sold forward dollars for maturity in October and November to neutralise the impact of its recent spot interventions on rupee liquidity, dealers said.

The RBI has been actively selling dollars in the spot market since last week and has prevented the rupee from falling below the key 87-per-dollar mark. Since spot dollar sales drain rupee liquidity from the banking system, the RBI conducts buy-sell swaps to replenish liquidity.

Earlier in the day, the premium on the one-year dollar/rupee forward contract rose to 2.14%, tracking a fall in US Treasury yields. Forwards of a currency pair are reflective of the interest rate differential between the two countries.

At 1530 IST, the one-year exact period dollar/rupee forward premium was 182.00 paise, against 184.00 paise Thursday. On an annualised basis, the premium was 2.10%, down from Thursday's close of 2.12%. 

OUTLOOK

On Monday, the rupee will take cues from movement in the dollar index after the release of the US Flash Purchasing Managers' Index for February due later in the day. Traders will also assess speeches by Federal Reserve Bank of San Fransisco President Mary Daly and US Federal Reserve Vice-Chair Philip Jefferson late Friday. 

Dealers expect banks to continue to purchase the greenback on behalf of importers, fearing a further fall in the rupee amid uncertainties surrounding tariff raises by the US administration. Traders expect the central bank to intervene through dollar sales and prevent the rupee from inching towards 87 a dollar.

During the day, the rupee is seen in a range of 86.40-87.20 a dollar, with strong technical support pegged at 87.00 a dollar.

India Rupee - World FX: Euro falls 0.3% post weak flash PMI, yen down 0.5%

MUMBAI – The euro fell 0.3% against the dollar after data released on Friday showed the flash manufacturing purhasing managers' index for the eurozone advanced, but still indicated contraction. The eurozone flash manufacturing PMI rose to 47.3 in February from 46.6 in January, while the flash services PMI dropped to 50.7 from 51.3 the previous month. A PMI reading above 50 indicates expansion in the sector, while a reading below 50 indicates contraction. 

However, losses in the currency were limited after Germany, the bloc's largest economy, posted a rise in manufacturing PMI in February. The manufacturing PMI print rose to 46.1 from 45.0 in January. The services PMI fell marginally to 52.2 from 52.5 in the previous month. 

After hitting an over 11-week high earlier in the day, the Japanese yen retreated and fell 0.5% against the dollar on Friday. The yen rose sharply after data released on Friday showed that Japan's core consumer inflation rose to 3.2% in January, its fastest pace in 19 months and higher than the market estimate of 3.1% and December's 3.0%. The data reinforced market participants' expectations that the Bank of Japan will continue raising interest rates. 

The Australian dollar was down 0.2% against the greenback. However, losses in the Australian unit were capped after Australia's PMI data on Friday showed the country's private sector expanded at a faster pace in February. The services PMI was at 51.2 in February, against 51.1 in January. Meanwhile, the New Zealand dollar traded flat against the greenback. 

The pound sterling was down 0.2% against the greenback after the UK manufacturing PMI unexpectedly declined to 46.4 in February from 48.3 in January. Meanwhile, the preliminary UK services business activity index improved to 51.1 in February from January's 50.9. 

The Canadian dollar was down 0.1% against the US unit. Traders await Canada's retail sales data for December and preliminary retail sales for January, due later in the day. Market participants are also waiting for Bank of Canada Governor Tiff Macklem's speech later in the day to get more cues on the central bank's rate outlook and health of the economy. 

The dollar index edged slightly higher in European trade after slipping on Thursday. The index had fallen after data showed intial jobless claims in the US in January rose more than expectated. Initial jobless claims in the US rose 5,000 to a seasonally adjusted 219,000, against analysts' forecast of a 215,000 increase, according to a Reuters poll.

At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 106.67, compared to 106.33 on Thursday and 107.16 on Wednesday. The index fell to 106.33 on Thursday, the lowest since Dec. 11. Traders now await US manufacturing PMI data for February, due later in the day. They will also assess speeches by US Federal Reserve San Fransisco President Mary Daly and US Fed Vice Chairman Philip Jefferson late Friday.  (Gowri Lakshmi)

India Rupee: Premiums fall across tenures as RBI likely sells forward dlrs

NEW DELHI – The premiums on dollar/rupee forward contracts fell across tenures Friday as the Reserve Bank of India is likely to have sold forward dollars for maturity in October and November to neutralise the impact of its recent spot interventions on rupee liquidity, dealers said.

"They (the RBI) are consistently receiving in forwards. They are hitting the long tenures because I think they want to support durable liquidity at this point," said a dealer at a foreign bank. "I think they will continue with this till the time they see less risk to rupee liquidity."

The RBI has been actively selling dollars in the spot market since last week and has prevented the rupee from falling below the key 87-per-dollar mark. Since spot dollar sales drain rupee liquidity from the banking system, the RBI conducts buy-sell swaps to replenish liquidity.

A buy/sell swap entails buying dollars for immediate delivery and entering into a contract to sell these at a future date, thereby postponing the drain on systemic liquidity. On Thursday, the net liquidity injected by the RBI--a proxy for the systemic liquidity deficit--was INR 1.88 trillion, against INR 1.77 trillion on Wednesday.

Earlier in the day, the premium on the one-year dollar/rupee forward contract rose to 2.14%, tracking a fall in US Treasury yields. The 10-year benchmark US Treasury yield fell after data showed initial jobless claims in the US were higher than expected in the week ended Saturday. Forwards of a currency pair are reflective of the interest rate differential between the two countries.

At 1415 IST, the one-year exact period dollar/rupee forward premium was 181.78 paise, against 184.00 paise Thursday. On an annualised basis, the premium was 2.10%, down from Thursday's close of 2.12%.  (Pratiksha) 

India Rupee: Pares all gains as oil cos, importers buy dlrs; local shrs fall

MUMBAI – The rupee erased all gains from earlier in the day against the dollar as banks purhased the greenback on behalf of oil marketing companies and other importers, dealers said. A fall in domestic equities also weighed on the local unit, they said. The rupee rose to a high of 86.4750 a dollar at open. 

Banks bought dollars on behalf of importers, who wanted to take advantage of the relatively lower dollar/rupee levels, according to dealers. "Importers rushed (to buy dollars) in the morning itself given the levels were good. They were expecting some more rise in the currency, but seems like the rupee isn't getting any support today (Friday)," said a dealer at a public-sector bank. 

A fall in the domestic equities also weighed on the rupee, according to dealers. At 1335 IST, the benchmark indices, the Nifty 50 and the BSE Sensex, were down 0.7% each. "Looks like rupee will be range-bound within 86.70 today (Friday)," said a dealer at a state-owned bank. "It is unlikely to breach 86.70 (a dollar), cause some support there on can be expected at that level."

Some dealers also speculated that some public sector banks may have purchased dollars on behalf of the Reserve Bank of India, which also weighed on the Indian unit. "The buying (of dollars)  doesn't solely look like from importers. RBI dollar buying could likely be there," said a dealer at a private bank.

The rupee rose sharply earlier in the day due to a fall in the dollar index as investors took a step back and assessed President Donald Trump's latest tariff plans. The index also declined after US initial jobless claims data on Thursday showed an increase in the number of Americans filing for unemployment benefits last week. 

At 1335 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 106.48, compared to 106.33 on Thursday and 107.16 on Wednesday. The dollar index fell to 106.33 on Thursday, the lowest since Dec. 11.

For the rest of the day, the rupee is seen moving in a range of 86.40-86.80 against the dollar. Dealers see immediate support for the Indian unit at 86.70 a dollar.  (Gowri Lakshmi)

India Rupee: Technical Levels for rupee - Feb 21

MUMBAI – At 1035 IST, the rupee was at 86.6000 per dollar. At 0900 IST, the rupee was at 86.4750 a dollar against its previous close of 86.6600. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Sourabh and Gowri Lakshmi)

India Rupee - Asia FX: Most up as dlr index slips post US jobless claims data

MUMBAI – Most Asian currencies traded higher on Friday as the dollar index slipped after the release of the US initial jobless claims data Thursday. The data showed that the number of Americans filing for the unemployment benefit rose 5,000 for the week ended Feb. 15 to a seasonally adjusted 219,000 claims. It was higher than the expected increase to 215,000 as per a Reuters poll.

A surge in the Japanese yen also weighed on the dollar index, after inflation data from Japan released early Friday strengthened investors' hopes of another rate hike by the Bank of Japan. The yen retreated slightly later on. The dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 106.44 at 0842 IST, compared to 106.33 on Thursday and 107.16 on Wednesday. The Malaysian ringgit was up 0.2% against the greenback.

The Indonesian rupiah was 0.3% higher against the greenback. Gains in the Indonesian currency were capped after data from the central bank on Thursday showed that the country's current account deficit widened to $1.1 billion, or 0.6% of GDP in the last quarter of 2024.

The Taiwan dollar was up 0.2% against the greenback. However, gains in the Taiwanese currency were limited after the country's export orders fell for the first time in 11 months in January. Data on Thursday showed Taiwan's export orders dropped 3.0% on year last month to $46.97 billion. 

The South Korean won was up 0.2% against the US dollar. South Korean officials have requested the US administration for an exemption in reciprocal tariffs on steel and aluminium during their visit this week to Washington.

Further, the Bank of Korea is expected to lower its interest rates by 25 basis points on Tuesday amid rising concerns about sluggish economy, Reuters reported. Economists in a Reuters poll expect a further 50 bps of easing in South Korea's monetary policy. 

The Chinese yuan traded flat against the US unit. On Thursday, the People's Bank of China vowed to provide strong financial support for the developement of private economy and growth of private enterprises. The Chinese central bank will further smoothen the channels for stock, bond and loan financing for private enterprises, Reuters reported. 

The Philippines peso traded flat against the US dollar. On Friday, data from the Philippines central bank showed that the country posted a balance of payments deficit of $4.1 billion in January, its largest in 11 years.

Bucking the trend, the Thai baht was down 0.1% against the greenback, tracking a fall in domestic equities. At 0842 IST, the benchmark index, Thai Set index was down 0.2%.  (Gowri Lakshmi)

India Rupee: Up as dollar drops on US jobs data; importers' dlr buys cap rise

MUMBAI – The rupee rose against the dollar on Friday as the dollar index dropped after US initial jobless data on Thursday showed an increase in the number of Americans filing for unemployment benefits last week, dealers said. However, gains in the Indian currency were capped as banks rushed to purchase the greenback on behalf of importers, they said. 

Initial jobless claims in the US rose 5,000 to a seasonally adjusted 219,000 in the week ended Saturday, against analysts' forecast of a 215,000 increase. At 0926 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 106.42, compared to 106.33 on Thursday and 107.16 on Wednesday. The dollar index fell to 106.33 on Thursday, the lowest since Dec. 11.

Tracking a fall in the dollar index, most other Asian currencies appreciated, which provided further boost to the rupee, dealers said. Barring the Thai baht, other Asian currencies rose 0.1-0.3% in early Asian trade.

However, gains in the Indian unit were limited as banks purchased dollars on behalf of importers, dealers said. "There is continuous buying (of dollars), which is pulling the rupee down," a dealer at a state-owned bank said. "The levels are definitely attractive so importers are booking their profits." Shortly after opening at 86.4750, the rupee was dragged down to a low of 86.5825 in early trade due to importers' dollar demand. 

During the day, the rupee is seen moving in a range of 86.30-87.00 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 21

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:

(Sourabh Kumar, Pratiksha, and Gowri Lakshmi)

End

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

Edited by Rajeev Pai

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