More Stories

Informist, Monday, Feb. 24, 2025

By Gowri Lakshmi 

MUMBAI – The rupee pared most gains against the dollar as the dollar index recovered from a near 11-week low it fell in early Asian trade, dealers said. Persistent dollar purchases by banks, on behalf of importers, also put the rupee under pressure, they said. 

"It has now become difficult to predict when the rupee will breach 87 (a dollar). The trend for the past two weeks has been range-bound trading, mostly within 20-25 paise," said a dealer at a state-owned bank. "But comparatively, the RBI (Reserve Bank of India) isn't as active as it used to be... current levels look like a market correction."

The rupee, which touched a high of 86.5600 at open, settled at 86.6950 against the greenback, compared to its previous close of 86.7125. The Indian unit moved in a range of 19 paise during the day. 

A rise in most other Asian currencies aided the Indian rupee, according to dealers. Other Asian currencies rose between 0.1-0.6%, with the South Korean won being the best-performing currency amongst peers.

The rupee opened sharply higher against the dollar at 86.5600 tracking a slump in the dollar index, dealers said. The dollar index had fallen in early Asian trade due to a strength in the euro after Germany's opposition conservatives won the national election and Friedrich Merz is likely to become the next chancellor. The euro carries a weightage of 57.6% in the dollar index.

The dollar index also fell after data on Friday showed a decline in US consumer confidence in their economy, and as the business activity in the world's largest country fell to a 17-month low in February.

However, the dollar index recovered slightly in the European trade and erased most of its losses, which weighed on the Indian unit, dealers said. At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 106.61, compared to 106.64 on Friday and 106.33 on Thursday. The dollar index had slumped to a low of 106.13 earlier in the day, the lowest level since Dec. 10. 

Shortly after the market opened, the rupee came under immense pressure as banks rushed to purchase the greenback on behalf of importers, dealers said. Importers continuously demanded the greenback to take advantage of the relatively lower dollar/rupee levels. "There was continuous buying (of dollars) as soon as the market opened, which pulled the rupee down immediately within 2-3 minutes of opening," said a dealer at a state-owned bank. 

The recovery in the dollar index coupled with persistent dollar demand from importers throughout the day, dragged the rupee to the day's low of 86.7500 against the dollar. Dealers said the Reserve Bank of India has been "completely absent" from the domestic spot market in the last few days as it now "looks like the rupee is at a comfortable level for the RBI". "There is no need for supply at these levels, they have been letting it go till 80 (86.80) and were still comfortable. Even the initial euphoria and panic buying for importers are less since last few days," said a dealer at a private bank.

The domestic equities also fell sharply Monday, which further put the rupee under pressure, according to some dealers. The Nifty 50 and the BSE Sensex ended 1.1% down, each. 

FORWARDS 

Premiums on dollar/rupee forward contracts ended down across tenors, with the one-year forward premium ending near a 12-week low after the Reserve Bank of India announced after market hours on Friday that it would hold a $10-billion, 3-year dollar/rupee buy/sell swap auction on Feb. 28, dealers said. 

The RBI will conduct the dollar/rupee swap auction to meet the durable liquidity needs of the banking system, the central bank said Friday. This is the biggest quantum for a dollar/rupee swap auction by the RBI on record. The swap will reverse on Mar. 6, 2028, the RBI said. 

While most dealers expected forward premiums to fall from last week's levels, they said the downward movement would be contained due to the continuous forward dollar purchases by importers. The RBI's forward dollar sales, likely to offset the impact of its spot sales on rupee liquidity, may also push premiums lower going ahead, dealers said.

At 1530 IST, the one-year exact period dollar/rupee forward premium was 176.55 paise, against 182.00 paise Friday. On an annualised basis, the premium was 2.04%, down from Friday's close of 2.10%.

OUTLOOK

On Tuesday, the rupee will take cues from the movement in the dollar index and crude oil prices, dealers said. The rupee will also closely track the offshore Chinese yuan, they said. 

Dealers expect banks to continue to purchase the greenback on behalf of importers, fearing a further fall in the rupee amid uncertainties surrounding the US tariff policies. Traders expect the central bank to intervene through dollar sales and prevent the rupee from inching towards 87 a dollar. Market participants now expect exporters to be active in selling the dollar only when the rupee breaches 87 a dollar.

During the day, the rupee is seen in a range of 86.40-86.80 a dollar, with strong technical support pegged at 86.80 a dollar.

India Rupee - World FX: Dollar index recovers from 11-week low; euro up 0.2%

MUMBAI – The dollar index recovered slightly from the 11-week lows it hit in early Asian trade on Monday. The dollar index had declined tracking a rise in the euro after Germany's opposition conservatives won the national election and Friedrich Merz became the next chancellor. The index also fell after data on Friday showed a decline in US consumer confidence. 

A survey by the University of Michigan, which measures consumer sentiment regarding the overall economy of the country, dropped to 64.7 in February from January's revised reading of 71.7. It fell to a 15-month low this month. Further, amid multiple tariff announcements by US President Donald Trump, consumer inflation expectations also shot up. 

At 1449 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 106.50, compared to 106.64 on Friday and 106.33 on Thursday. The dollar index slumped to 106.13 earlier in the day, the lowest level since Dec. 10.

The euro remained higher against the US dollar and was up 0.2%. Market participants now await the Eurozone inflation data for January, due later in the day. The Japanese yen was down 0.1% against the greenback. In early Asian trade, the Japanese yen hit a near 12-week high against the US on rising expectations of an interest rate hike by the Bank of Japan.

The pound sterling traded flat against the US unit. Market participants are waiting for Bank of England Deputy Governor for Monetary Policy Clare Lombardelli and Bank of England Deputy Governor Dave Ramsden's speeches due later in the day for more cues into the UK central bank's rate outlook. 

The New Zealand dollar was up 0.1% against the greenback as the country's retail sales rose 0.9% in Oct-Dec, from a 0.1% decline in the previous quarter. The data released earlier in the day showed that gains in retail sales were the most in three years. Tracking a rise in the New Zealand unit, the Australian dollar was up 0.1% against the US unit. Any change in the New Zealand economy directly impacts the currency of Australia due to their close bilateral trade relations. 

Meanwhile, the Swiss franc and the Canadian dollar were both up 0.1% against the US dollar. Traders await Bank of Canada Deputy Governor Toni Gravelle's speech due later in the day.  (Gowri Lakshmi) 

India Rupee: Erases most gains as importers buy dollars; weak dlr index aids

MUMBAI – The rupee erased most of its early gains against the dollar as banks persistently purchased greenback on behalf of importers, dealers said. The Indian currency rose to a high of 86.5600 earlier in the day due to weakness in the dollar index.

The rupee came under pressure and was dragged to a low of 86.7000 during the day as banks persistently purchased the greenback on behalf of importers, who wanted to take advantage of the relatively lower dollar/rupee levels, dealers said. "The demand for the dollar comes from the sentiment that these levels are attractive and a sharp appreciation from these levels is unlikely," said a dealer at a state-owned bank. "So at every level, importers are hedging before it's too late." 

A sharp fall in domestic equities also weighed on the rupee, dealers said. At 1255 IST, the benchmark Nifty 50 and the BSE Sensex were down 1%, each. 

The dollar index slumped to a near 11-week low earlier in the day as the euro strengthened after provisional results showed Germany's opposition conservatives winning the national election and Friedrich Merz becoming the next chancellor. This provided support to the Indian unit, dealers said. At 1255 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 106.29, compared to 106.64 on Friday and 106.33 on Thursday. The dollar index hit a low of 106.13 in early trade, its lowest level since Dec. 10. 

Dealers said the rupee may continue to move in a range of 86.55-86.70 against the dollar for the rest of the day. "All the buying (of dollars) was mostly done in the first 10 minutes, after which the rupee has been largely steady," said a dealer at a public sector bank. "The rupee is likely to stabilise during the European trade session unless weighed down by a recovery in the dollar index." Dealers see immediate technical support for the Indian unit at 86.70 a dollar. (Gowri Lakshmi)

India Rupee: Technical Levels for rupee - Feb 24

MUMBAI – At 1109 IST, the rupee was at 86.6725 per dollar. At 0900 IST, the rupee was at 86.5600 a dollar against its previous close of 86.7125. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Gowri Lakshmi, Pratiksha, and Sourabh Kumar)

India Rupee:1-yr fwd premium near 12-wk low before RBI's FX swap auction Fri

MUMBAI – Premiums on dollar/rupee forward contracts were down across tenors, with the one-year forward premium falling to a near 12-week low after the Reserve Bank of India announced post-market hours on Friday that it would hold a $10-billion, 3-year dollar/rupee buy/sell swap auction on Feb. 28, dealers said. 

"It came down as expected, but we saw some good paying from importers at these levels," a dealer with a state-owned bank said. The one-year exact period dollar/rupee forward premium fell to 1.96%, the lowest since Dec. 5. However, it recovered slightly as importers purchased forward dollars, taking advantage of relatively lower premiums.

The one-year forward premium was at 1.99% on an annualised basis at 1020 IST, down from Friday's close of 2.10%. On an absolute basis, it was 172.60 paise, against 182.00 paise on Friday.

The RBI will conduct the dollar/rupee swap auction in order to meet the durable liquidity needs of the system, the central bank said in a press release on Friday. This is the biggest quantum for a dollar/rupee swap auction by the RBI on record. The swap will reverse on Mar. 6, 2028, the RBI said. 

Banking system liquidity has been in deficit since mid-December, with market participants attributing the tightness to the RBI's spot dollar sales in order to soften the rupee's depreciation. The RBI has been conducting dollar/rupee buy/sell swaps since December in the currency forwards market intermittently to offset the impact of its dollar sales in the spot market and avert pushing out rupee liquidity.

On Friday, the net liquidity injected by the RBI--a proxy for the systemic liquidity deficit--was at INR 1.93 trillion, against INR 1.88 trillion on Thursday.

While most dealers expect forward premiums to fall from last week, they said the downward movement would be contained due to importers' continuous forward dollar purchases. The RBI's forward dollar sales, likely to offset the impact of its spot sales on rupee liquidity, may also push premiums lower, dealers said.  (Sourabh Kumar)

India Rupee: Tad up as dollar index falls; importers' dollar buys limit gains

MUMBAI – The rupee rose slightly against the greenback on Monday as the dollar index slumped to a near-11-week low in early Asian trade, dealers said. However, gains in the Indian unit were limited as banks purchased the greenback on behalf of importers, they said. The rupee touched a high of 86.5600 a dollar at open, after which it came under pressure from importers' dollar demand.

The rupee strengthened, tracking a fall in the dollar index, dealers said. The dollar index fell as the euro gained after provisional results showed Germany's opposition conservatives winning the national election and Friedrich Merz becoming the next chancellor. The election was held after the ruling coalition, led by Chancellor Olaf Scholz, collapsed following disagreements over weakness in Europe's largest economy. 

At 0930 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 106.18, compared to 106.64 on Friday and 106.33 on Thursday. The dollar index slumped to 106.13 earlier on Monday, the lowest level since Dec. 10. 

A rise in other Asian currencies also aided the rupee, according to some dealers. "The general weakness in the dollar index and rise in other Asian currencies are definitely aiding the rupee. One reason for the sustained 86 'something' level is due to the weakness in the dollar index," a dealer at a public-sector bank said. "Until the dollar index recovers significantly, a sharp depreciation in rupee even without any support is unlikely and a strong sentiment (for rupee appreciation) will remain." 

However, gains in the Indian unit were capped as banks rushed to purchase the greenback on behalf of importers, who took advantage of the relatively lower dollar/rupee levels, dealers said. Due to continuous dollar demand, the rupee was dragged to a low of 86.6750 within a few minutes after the domestic spot market opened. 

"These are really good levels, importers and corporates are all continuously buying which is pulling the rupee down," said a dealer at a state-owned bank. "But most likely the rupee should remain range bound between 86.55-86.70 for the day as there are no global cues to create volatility." 

A fall in domestic equities also put the rupee under pressure, dealers said. At 0930 IST, the benchmark indices, the Nifty 50 and the BSE Sensex were down 0.8%, each. During the day, the rupee is seen moving in a range of 86.50-86.90 against the dollar. Dealers see immediate technical support for the Indian unit at 86.70 a dollar.  (Gowri Lakshmi)

India Rupee - Asia FX: Most rise as dollar index falls to near 11-week low

MUMBAI – Most Asian currencies strengthened against the dollar as the dollar index fell to a near 11-week low in early trade Monday. The Thai baht was among the best performers in Asia, rising 0.5% against the greenback in early trade, as market participants expect the Bank of Thailand to keep benchmark rates unchanged on Wednesday. 

Most economists expect Thailand's central bank to keep the one-day repurchase rate steady at 2.25%, as per a poll by Reuters. The central bank will announce its decision amid a continued tussle between itself and the Thai government on easing rates. The Thai government has time and again urged the central bank to ease rates in a bod to boost the economy.

The South Korean rose 0.5% against the US currency due to a fall in the dollar index. However, gains in the currency were limited as the Bank of Korea is widely expected to cut its benchmark rates by 25 basis points on Tuesday.

The Taiwan dollar was steady against the greenback. A fall in the Taiwan Stock Exchange Capitalization Weighted Stock Index weighed on the currency. The index was down 0.7% in early trade Monday.

The Malaysian ringgit was up 0.4% against the US dollar. The Philippines peso and Indonesian rupiah were up 0.1% against the greenback.  (Sourabh Kumar)

India Rupee: Expected range for rupee - Feb 24

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

(Sourabh Kumar and Pratiksha)

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.