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Informist, Wednesday, Mar. 5, 2025

By Gowri Lakshmi

MUMBAI – The rupee ended sharply higher against the dollar, rising above the psychologically-crucial level of 87 per dollar, as the dollar index declined to a near four-month low during European trade, dealers said. The Indian currency posted its biggest single-day gain in over three weeks on Wednesday.

"There was limited buying pressure for the rupee. On a global scale and in domestic front, everything was in favour of the Indian unit," said a dealer at a state-owned bank. "The rupee might hold these levels for some time given the broad-based weakness in dollar."

After appreciating 0.4% against the dollar, the rupee settled at an over one-week closing high of 86.9550 a dollar. The rupee moved in a range of 30 paise during the day. 

A rise in other Asian currencies also strengthened the Indian unit, dealers said. Other Asian currencies gained 0.1-0.8%, with the Malaysian ringgit and the Indonesian rupiah being the best performers amongst their peers.

The rupee opened a tad higher against the dollar as the dollar index slumped over 1% on Tuesday as the euro strengthened after Germany's conservaties and the Social Democrats agreed on a historic debt overhaul. The newly elected German government agreed to create a $530.95-billion infrastructure fund and to overhaul borrowing rules as part of a spending shift to revamp the military and spur growth in the bloc's largest economy.

The dollar index also declined as investors were worried about the impact of a global trade war on the US economy, which is already showing signs of weakness. US President Donald Trump sparked a full-fledged trade war as the new 25% tariffs on imports from Canada and Mexico, which took effect on Tuesday, coupled with an additional 20% import duties on Chinese goods, led to retaliatory actions from the respective countries. 

Shortly after the market opened, weakness in the dollar prompted traders to sell the greenback to cut existing long dollar bets, leading to stop-losses being triggered on long dollar bets at around 87.20 a dollar. Following this, the rupee rose to 87.1000 a dollar. 

A sharp rise in domestic equities also aided the rupee, dealers said. Both the benchmark indices, the Nifty 50 and BSE Sensex remained in the green during the day and ended 1.2% and 1% higher, respectively. The 50-stock index snapped a 10-day losing streak, its longest since 1996.

The dollar index fell further during the European trade, hitting a near four-month low, tracking gains in the euro and other major currencies. Following this, the rupee rose above the key 87-per-dollar mark and touched the day's high of 86.9325 a dollar. 

"After the kind of fall we have seen in the dollar index. the outlook has changed. If this weakness persists we may see more downside to USDINR (dollar/rupee)," said a dealer at a foreign bank. "A lot of long (dollar) positions unwinding happened today (Wednesday)."

At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 104.88, against 105.53 on Tuesday and 106.55 on Monday. The index Wednesday fell to 104.85, its lowest level since Nov. 8.

As the rupee rose above 87-per-dollar, some banks rushed to purchase the greenback on behalf of oil marketing companies and other importers, who wanted to take advantage of the relatively lower dollar/rupee levels, dealers said. This capped gains in the Indian currency. However, some importers still kept to the sidelines, waiting for the rupee to rise above 86.90 a dollar. 

"They (importers) were definitely waiting for 86.90 levels since yesterday (Tuesday). As soon as it touched above 87, importers booked profits," said a currency trader. "If not for that buying (of dollars), the rupee could have risen to 86.90 and above." 

FORWARDS 

The premium on the one-year dollar/rupee forward contract erased all earlier gains and ended marginally lower as banks stepped in to sell dollars for forward delivery, noting the relatively higher premium levels, dealers said. The premium on the one-year dollar/rupee forward contract had jumped to a near three-week high of 2.24% earlier in the day. 

Premiums rose earlier tracking broadly softer US Treasury yields, dealers said. The benchmark US Treasury yield has fallen almost 20 basis points since last week. Market participants expect US Treasury yields to fall in the coming days due to concerns over the impact of a global trade war on US economic growth, at a time when the economy is already showing signs of weakness. 

At 1530 IST, the premium on the one-year exact-period dollar/rupee forward contract was 190.36 paise, against 191.25 paise on Tuesday. On an annualised basis, the premium was at 2.18%, against Tuesday's close of 2.19%.

OUTLOOK

On Thursday, the rupee will take cues from the movement in the dollar index and the Chinese yuan, dealers said. Market participants will closely track and assess any developments related to US tariff imposition, they said. 

Dealers expect the currency market to be less volatile as compared to Wednesday and believe importers to remain in a wait and watch mode on expectation that the dollar index will sustain its current broad weakness. However, some dealers expect importers to buy dollars if the rupee rise above 86.90 a dollar. "These levels of 86.90-87.00 should hold for this week," a dealer at a brokerage said.

Some dealers expect the Reserve Bank of India to step in to buy dollars to replenish its foreign exchange reserves if the rupee rises sharply. Further, they also expect banks to purchase dollars on behalf of FPIs who are looking to exit the Indian market, which may weigh on the Indian currency. 

During the day, the rupee is seen moving in a range of 86.90-87.30 against the dollar, with strong resistance for the Indian unit pegged at 86.90 a dollar.

India Rupee - World FX: Dollar index hits near 4-month low; euro surges 0.8%

MUMBAI – The dollar index slumped to a near four-month low as investors were worried about the impact of a trade war on the US economy, which is already showing signs of weakness. The 25% tariff imposed by the US on imports from Canada and Mexico and additional 10% tariff on Chinese goods that took effect on Tuesday has led to retaliatory actions from Canada and China.

At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 104.88, against 105.53 on Tuesday and 106.55 on Monday. The index Wednesday fell to 104.85, its lowest level since Nov. 8.

The euro jumped up 0.8% against the dollar to a near four-month high after Germany's Conservatives and the Social Democrats agreed on a historic debt overhaul. Germany's next government agreed to create a $530.95 billion infrastructure fund and to overhaul borrowing rules as part of a spending shift to revamp the military and spur growth in the bloc's largest economy. 

The Canadian dollar was up 0.1% against the US dollar after Canadian Prime Minister Justin Trudeau hit the US back with 25% tariffs on $20.7 billion worth of US imports. The pound sterling was up 0.5% against the greenback ahead of purchasing managers' index, due later in the day.

The Japanese yen was up 0.4% against the greenback after Japan's services sector grew at the fastest pace in six months in February. Data on Wednesday showed that Japan services PMI was revised higher to 53.7 in February, up from a preliminary reading of 53.1 and 53.0 a month before. The composite PMI stood at 52.0 last month, above the flash data of 51.6 and up from 51.1 in January. A PMI reading above 50 indicates expansion in the sector.

The yen also gained after Bank of Japan Deputy Governor Shinichi Uchida hinted at more rate hikes but at a gradual pace. "The Bank will accordingly continue to raise the policy interest rate and adjust the degree of monetary accommodation," Uchida said. "In this regard, the key point of the outlook is that the bank expects the 2% price stability target to be achieved."

The Australian dollar was up 0.2% against the US unit on upbeat GDP growth in Oct-Dec. Australia's GDP grew 1.3% on year in Oct-Dec, accelerating for the first time since September 2023. The growth also beat estimates of 1.2% by analysts in a poll by Reuters. Further, Reserve Bank of Australia Deputy Governor Andrew Hauser signalled that the central bank is in no hurry to cut rates further, which aided the currency. On Wednesday, Hauser said that the central bank had cut its benchmark rates last month due to fears of a global trade war and slowing economic growth.

The New Zealand dollar was up 0.3% tracking gains in the Australian currency. However, the gains were capped as Reserve Bank of New Zealand Governor Adrian Orr resigned unexpectedly. Orr resigned on Wednesday, ending a seven-year term, without giving any reason. "I leave the role with consumer price inflation at target, and an economy in a cyclical recovery following the long period of COVID-related disruption. The financial system remains sound," Orr said. Deputy Governor Christian Hawkesby will be the acting governor until Mar. 31.

The Swiss franc was up 0.4% against the greenback because of safe-haven demand amid fear of a global trade war and as Switzerland's inflation rose more than expected in February. Switzerland's consumer price index rose by 0.6% last month, against the market forecast of 0.5%. (Gowri Lakshmi)

India Rupee: Remains sharply up as dlr index hits 4-mo low, Asian units gain

MUMBAI – The rupee remained sharply higher against the dollar on Wednesday, in line with its Asian peers, as the dollar index fell further and hit a near four-month low in European trade, dealers said. The rupee rose to 87.0275 a dollar during the day, its highest level since Feb. 25. 

The dollar index slumped, tracking gains in the euro, which rose 0.4% against the greenback after Germany's next government agreed to create a $530.95-billion infrastructure fund and overhaul borrowing rules as part of a spending shift to revamp the military and spur growth in the bloc's largest economy. The dollar index also declined as investors were concerned about the impact of a global trade war on the US economy, which is already showing signs of weakness. 

"A lot of long cutting is happening after the change in the dollar index direction," said a dealer at a state-owned bank. "Everybody was long dollar, this much of a correction was not expected." US President Donald Trump sparked a full-fledged trade war as new 25% tariffs on imports from Canada and Mexico, which took effect on Tuesday, coupled with 20% import duties on Chinese goods, led to retaliatory actions from the countries.

At 1325 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 105.34, compared to 105.53 on Tuesday and 106.55 on Monday. The index fell to 105.25 during the day, its lowest level since Nov. 11. 

A sharp rise in other Asian units also aided the Indian unit, according to dealers. Other Asian currencies gained 0.1-0.8% against the dollar, with the Philippine peso being the best performer. The Indian unit also got a boost from a sharp rise in domestic equities, dealers said. At 1325 IST, the Nifty 50 and BSE Sensex were up 1.3% and 1.1%, respectively.

Dealers said lack of dollar demand from importers around the current dollar/rupee levels also provided support to the Indian unit. "At these levels, even buying (of dollars) isn't there. Importers have entered into their 'wait and watch mode'," said a dealer at a private bank. "The rupee is expected to rise even further, they (importers) are waiting for 86.95-80 (a dollar) and above." 

For the rest of the day, the rupee is seen moving in a range of 86.90-87.20 against the dollar. Dealers see strong immediate technical resistance for the Indian unit at 87.00 a dollar.  (Gowri Lakshmi) 

India Rupee: Technical Levels for rupee - Mar 5

MUMBAI –  At 1046 IST, the rupee was at 87.1175 per dollar. At 0900 IST, the rupee was at 87.2300 a dollar, against the previous close of 87.2650. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Pratiksha and Gowri Lakshmi)

India Rupee: Sharply up as dlr index slips to near 3-mo low; stop-losses hit

MUMBAI – The rupee rose sharply against the dollar on Wednesday after the dollar index hit a near three-month low on Tuesday due to a rise in the euro and concerns about the impact of a trade war on the US economy, dealers said.

The dollar index slumped as the euro hit an over three-month high in early Asian trade after Germany's conservaties and the Social Democrats agreed on a historic debt overhaul. Germany's next government agreed to create a $530.95-billion infrastructure fund and to overhaul borrowing rules as part of a spending shift to revamp the military and spur growth in the bloc's largest economy. 

"The rupee isn't posting as much as gains as it should because the primary reason why dollar was weak is due to gains in euro," said a dealer at a state-owned bank. "As the day goes, if euro's gains are pared then we may see a reversal in rupee movement." The dollar index also declined as investors were worried about the impact of a trade war on the US economy, which is already showing signs of weakness. 

At 0955 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 105.67, compared to 105.53 on Tuesday and 106.55 on Monday. The index fell to 105.53 on Tuesday, its lowest level since Dec. 6. 

The rupee opened a tad higher at 87.2300 a dollar, but weakness in the dollar index prompted traders to sell the greenback to cut existing long dollar bets, leading to stop-losses being triggered on long dollar bets at around 87.20 a dollar, dealers said. Following this, the rupee rose to a high of 87.1000 a dollar. 

However, gains in the currency were capped as risk sentiment among investors was dampened after Trump in his first speech to a joint session of Congress on Wednesday vowed to impose reciprocal tariffs against several countries including India, as part of his 'Make America Great Again' plan from Apr. 2.

During the day, the rupee is seen moving in a range of 87.00-87.40 against the dollar. Dealers see immediate technical resistance for the Indian unit at 87.00 a dollar. (Gowri Lakshmi)

India Rupee - Asia FX: Most rise as dollar index slumps to near 3-month low

MUMBAI – Most Asian currencies traded higher against the dollar on Wednesday as the dollar index slumped to a near three-month low on Tuesday due to a rise in the euro and concerns about the impact of a global trade war on the US economy, which is already showing signs of weakness. 

US President Donald Trump sparked a full-fledged trade war with new 25% tariffs on imports from Canada and Mexico, which took effect on Tuesday, coupled with the import duty on Chinese goods being doubled to 20%, which led to retaliatory actions. The index also fell after the euro hit an over three-month high in early Asian trade after Germany's conservaties and the Social Democrats agreed on a historic debt overhaul. Germany's next government agreed to create a $530.95-billion infrastructure fund and to overhaul borrowing rules as part of a spending shift to revamp the military and spur growth in the bloc'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 105.66, compared to 105.53 on Tuesday and 106.55 on Monday. The index fell to 105.53 on Tuesday, its lowest level since Dec. 6.

The Indonesian rupiah rose 0.5% against the greenback, the most among its peers, due to gains in the domestic stock market. At 0930 IST, the benchmark index, the Jakarta Composite Index, was up 2.5%. 

The philippines peso rose 0.4% against the US unit. However, gains in the currency were limited as data released on Wednesday showed the country's inflation hit the lowest level in five months in February. Annual inflation rate in the country slowed to 2.1% in February from 2.9% a month prior. 

The Malaysian ringgti was up 0.4% against the dollar. Market participants await the monetary policy decision by the central bank on Thursday, when it is expected hold the rates steady at 3.0%. The central bank is likely to maintain status quo on lending rates throughout the year as inflation and economic growth remain stable, according to economists in a Reuters poll. 

The Taiwan dollar was up 0.2% against the dollar, while the South Korean won traded flat. Data on Wednesday showed that South Korea's economy grew 0.1% in Oct-Dec from the previous quarter, unchanged from the central bank's earlier estimates. On an annual basis, the GDP expanded 1.2%. 

The Chinese yuan traded flat against the dollar amid fears of a trade war between China and the US. China responded to the tariff imposition by Washington immediately by announcing additional tariff of 10-15% on certain US imports from Mar. 10 and a series of new export restrictions for designated US entities. Meanwhile, China's National People's Congress began on Wednesday. China kept its economic growth outlook for the year unchanged at 5%, committing more fiscal resources to mitigate the impact of rising US trade tariffs and global shifts. Premier Li Qiang said the global shifts were something "unseen in a century".

Bucking the trend, the Thai baht was down 0.2%. Bank of Thailand on Tuesday defended its monetary policy stance as robust enough to withstand volatility from Washington and the tariff imposition on its trading parters. "Our latest cut is calibrated to be robust to many scenarios including the escalation of tariffs," Bank of Thailand Deputy Governor Piti Disyatat said.  (Gowri Lakshmi)

India Rupee: Expected range for rupee - Mar 5

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 Tanima Banerjee

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