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Informist, Thursday, Feb. 27, 2025

By Gowri Lakshmi

MUMBAI – The rupee ended steady against the dollar on Thursday as public-sector banks persistently sold the greenback, likely on behalf of the Reserve Bank of India, which offset the downward pressure from dollar purchases by banks for importers, dealers said. Noting the intervention by the RBI in the domestic spot market, some exporters also sold dollars, which lent further support to the Indian unit, dealers said.

"RBI is back in market with its aggressive (dollar) sales. Until now we saw passive selling (from the central bank), but with tariff concerns they would want to hold the rupee steady and not (let it) fall too much," a dealer at a private bank said.

The rupee recovered from an early fall to 87.4075 a dollar, the lowest level since Feb. 10, and ended steady at 87.2000 to the dollar against Tuesday's close of 87.2100. During the day, the rupee moved 30 paise against the dollar. Indian financial markets were closed on Wednesday.

A fall in other Asian currencies, ranging from 0.1% to 0.7%, also weighed on the Indian rupee, according to dealers. The South Korean won was the worst performer.

The rupee opened slightly lower against the dollar due to increased demand for dollars from importers, and within 15 minutes, the rupee fell to the day's low of 87.4075 a dollar, dealers said. Dollar purchases by importers were up to meet their month-end payment obligations, dealers said.

The rupee also came under pressure due to a slight rise in the dollar index, which rose because of growing uncertainties surrounding US tariff policies, dealers said. US President Donald Trump again postponed the date on which tariffs on Canada and Mexico would come into effect to Apr. 2 from Mar. 4.

At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 106.64, against 106.47 on Wednesday and 106.28 on Tuesday. Traders are waiting for the second estimate of the US GDP for Oct-Dec and weekly initial jobless claims for more cues on the health of the US economy and labour market. Both are due later in the day.

However, as soon as the rupee hit the day's low, public-sector banks stepped in with dollar sales, likely on behalf of the RBI, dealers said. This prevented the rupee from falling further, they said. In view of the persistent dollar demand, the central bank's intervention was relatively more "aggressive", which led the Indian currency to touch a high of 87.1100 against the US unit.

"Without aggressive dollar sales the rupee wouldn't have erased losses and rose further," said a dealer at a state-owned bank. "With rupee expected to breach the next big figure (88 a dollar) soon, the RBI just doesn't want the fall to be very fast."

Dealers said the RBI may have sold as much as $2 billion in the spot market on Thursday to support the domestic currency. Noting the central bank's aggressive intervention, some banks also sold the greenback on behalf of exporters, who did not expect the rupee would fall more, at least for the day, dealers said. This provided further support to the rupee.

However, dealers expect the rupee to come under more pressure due to concerns around US tariffs and as overseas investors continue to exit Indian markets. So far this month, foreign portfolio investors have withdrawn $4.6 billion from the domestic market.

FORWARDS

Premium on the one-year dollar/rupee forward contract ended higher as banks bought dollars on behalf of importers for forward delivery, dealers said. A fall in the benchmark 10-year US Treasury yield also pushed premiums higher, they said. Growing trade uncertainties, after US President Donald Trump again deferred the imposition of tariffs on Canada and Mexico, pulled the 10-year US Treasury yield lower.

Ahead of the RBI's $10-billion dollar/rupee buy/sell swap auction on Friday, premiums could ease, dealers said. However, continuous forward dollar purchases by importers may limit the downward movement, they said.

At 1530 IST, the one-year exact period dollar/rupee forward premium was 183.00 paise. On an annualised basis, the premium was 2.10%.

OUTLOOK 

On Friday, the rupee will take cues from the movement of the dollar index after the second estimate of the US GDP for the quarter ended December is detailed, dealers said. Traders will also assess US initial jobless claims data for the week ended Feb. 22. The rupee will also take cues from the movement of crude oil prices and the offshore Chinese yuan, dealers said.

Dealers expect importers to continue buying dollars to meet their month-end payment obligations, which could weigh on the domestic currency. Importers are also likely to purchase dollars, wary of a further fall in the local unit, dealers said. 

However, public-sector banks are expected to step in with dollar sales on behalf of the central bank to prevent the local currency from falling sharply and to curb excessive market volatility.

During the day, the rupee is seen moving in a range of 87.00-87.50 against the dollar, with immediate support for the Indian unit pegged at 87.50 a dollar.

India Rupee - World FX: Dlr index rises on tariff worries; US econ data eyed

MUMBAI – The dollar index rose Thursday amid growing uncertainty over the tariff policies of US President Donald Trump. Trump clouded the outlook for the looming levies on top trading partners Canada and Mexico on Wednesday by indicating that these would take effect from Apr. 2, which is another month-long extension.

At 1510 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 106.62 against Wednesday's 106.47 and 106.28 on Tuesday. Market participants now await the release of the US GDP for Oct-Dec, due later in the day, and the personal consumption expenditure data, due Friday. Traders will also asses the initial jobless claims data for the week ended Saturday, due later in the day.

The Japanese yen was down 0.4% against the greenback. Japan's top currency diplomat Atsushi Mimura said on Wednesday he did not see any disparity between recent rises in the yen and a slew of positive economic data, underlining Tokyo's view that the yen's recent rebound was broadly in line with an improving economy that could justify rise in Japan's interest rates, reports said.

The Canadian dollar was down 0.1% against the US unit due to rising tariff concerns. The euro was down 0.1% ahead of the eurozone consumer confidence index and consumer inflation expectation data for February due later in the day. 

Commodity-linked currencies the Australian dollar and New Zealand dollar were down 0.1% and 0.2%, respectively, tracking a fall in crude oil prices on Wednesday. Crude oil prices fell due to the rising potential of a peace deal between Russia and Ukraine. At 1510 IST, the April Brent Crude contract on the Intercontinental Exchange was $72.91 per barrel, compared to $72.53 per barrel on Wednesday and $73.02 per barrel on Tuesday. The pound sterling traded flat against the greenback while the Swiss franc was down 0.2% against the US unit.  (Gowri Lakshmi)

India Rupee: Premium rises as banks buy forward dollars for importers

MUMBAI – Premium on the one-year dollar/rupee forward contract rose Thursday as banks bought dollars on behalf of importers for forward delivery, dealers said. After opening at 2.03%, the one-year exact period dollar/rupee forward premium rose to 2.08% on an annualised basis at 1439 IST.

"Some paying is there in the market, probably by importers," a dealer with a state-owned bank said. Given the sharp fall of the rupee this week, and expectations that it may fall further, importers increased their forward dollar purchases.

The Reserve Bank of India has intervened less aggressively this week than last week, dealers said. Due to this, the rupee Tuesday fell the sharpest in a single day in over three weeks. As Indian financial markets were closed on Wednesday, the rupee came under pressure shortly after opening on Thursday and fell to a near three-week low of 87.4075 a dollar.

A fall in the benchmark 10-year US Treasury yield also pushed premiums higher, dealers said. Growing trade uncertainties, after US President Donald Trump again deferred the imposition of tariffs on Canada and Mexico, pulled the 10-year US Treasury yield lower.

Ahead of the RBI's $10-billion dollar/rupee buy/sell swap auction on Friday, premiums could ease, dealers said. However, continuous forward dollar purchases by importers may limit the downward movement, they said.  (Sourabh Kumar)

India Rupee: Technical Levels for rupee - Feb 27

MUMBAI – At 1130 IST, the rupee was at 87.2025 per dollar. At 0900 IST, the rupee was at 87.2525 a dollar against its previous close of 87.2100. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Gowri Lakshmi and Pratiksha)

India Rupee: Rises, erases all losses on likely aggressive RBI dollar sales

MUMBAI – The rupee rose after erasing all its earlier losses against the dollar on Thursday as some state-owned banks persistenly sold greenback, likely on behalf of the Reserve Bank of India, dealers said. Some banks' dollar sales for exporters also supported the Indian unit, they said. 

Earlier in the day, the rupee fell to a low of 87.4075 a dollar. However, the RBI likely stepped in aggressively through dollar sales around the level, after which the Indian currency rose to a high of 87.1100 a dollar, dealers said. "The (rupee) levels wouldn't have risen this much if RBI (intervention) was mild, they are pretty aggressive and do not want rupee to touch 87.50 (a dollar), which is a key level for them now," said a dealer at a public sector bank. 

Noting the central bank's aggressive intervention, some banks also sold the greenback on behalf of exporters, who wanted to take advantage of the relatively higher dollar/rupee levels, dealers said. "Most exporters are in a wait and watch mode, but some did cover their positions," a dealer at a state-owned bank said. "They are aiming for 87.50 to book most profits." 

However, gains in the Indian currency were capped as banks persistently purchased the US unit on behalf of importers to meet their month-end payment obligations, dealers said. "The month-end pressure will be there till tomorrow (Friday), post which market will likely move on what US does with tariffs. We may even inch very close to 88 (a dollar) by March-end," a dealer at another public sector bank said. 

For the rest of the day, the rupee seen in moving in a range of 87.00-87.50 against the dollar. Dealers see strong technical resistance for the Indian unit at 87.00 a dollar. (Gowri Lakshmi)

India Rupee: Sharply down on importers' dollar buys, rise in dollar index

MUMBAI – The rupee was sharply down against the dollar on Thursday as banks rushed to purchase the greenback on behalf of importers, dealers said. A rise in the dollar index also weighed on the local unit, they said. Money markets were shut on Wednesday on account of Mahashivratri.

The rupee came under immense pressure as banks persistently purchased the greenback on behalf of importers to meet their monht-end payment obligations, dealers said. "As soon as the market opened, the rupee (levels) kept going down. It's mostly merchants covering for their month-end payments, these pressures will be there today (Thursday) and tomorrow (Friday)," said a dealer at a state-owned bank said. 

The rupee fell to a low of 87.4075 within a few minutes after opening at 87.2525 a dollar in the domestic spot market.

A rise in the dollar index in early Asian trade also weighed the rupee, dealers said. Investors have remained cautious as uncertainty over tariffs by US President Donald Trump heightened. Trump has now postponed the date on which tariffs on Canada and Mexico will come into effect to Apr. 2 from Mar. 4.

At 0934 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at  106.62, compared to 106.47 on Wednesday and 106.28 on Tuesday.

"Let's see, demand for dollars will definitely be there today... but we expect some supply (of dollars) at around 87.45 per dollar levels," a dealer at a public sector bank said.

During the day, the rupee is seen moving in a range of 87.20-87.50 against the dollar. Dealers see immediate technical support for the Indian unit at 87.45 a dollar. (Gowri Lakshmi)

India Rupee - Asia FX: Most fall as dollar up; Thai baht down post rate cut

MUMBAI – Most Asian currencies were lower in early trade Thursday as the dollar index inched higher. The index was higher as investors remained cautious about the US President Donald Trump's tariff measures. In the latest move, Trump has deferred tariffs on Canada anad Mexico by another month, and these will now come into effect from Apr. 2.

The dollar index, which measures the strength in the greenback against a basket of six major currencies, was 106.62 at 0831 IST against Wednesday's 106.47 and 106.28 on Tuesday.

The South Korean won fell 0.5% against the greenback. The currency also came under pressure due to a fall in the country's domestic stock market. The Korea Composite Stock Price Index was down 0.9% in early trade Thursday.

The Malaysian ringgit fell 0.3% against the US dollar. The Thai baht was down 0.3% against the greeback. The Thai currency was under pressure as Thailand's central bank cut its benchmark rate by 25 basis points to 2.00% on Wednesday to spur growth amid a weak growth outlook and global uncertainty.

The Indonesian rupiah was down 0.2% due to a strengthening dollar index. The Taiwan dollar was slightly down against the greenback. It came under pressure as the country's statistics agency revised the 2025 GDP outlook down to 3.14% from the 3.29% forecast in November. The Philippines peso traded slightly lower against the greenback. 

Market participants now await the second estimate of US Oct-Dec GDP and the weekly US unemployment claims report, both due later in the day. They will also keep an eye on a speech by US Federal Reserve Governor Micheele Bowman on Thursday.  (Sourabh Kumar)

India Rupee: Expected range for rupee - Feb 27

MUMBAI – Following are the expected support and resistance levels for the rupee on Thursday, 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 Ashish Shirke

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