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Informist, Thursday, Mar. 6, 2025

 

By Gowri Lakshmi

 

MUMBAI – The rupee erased all its early gains and ended sharply lower against the dollar on Thursday as banks continuously purchased the greenback on behalf of oil marketing companies and other importers, dealers said. A slump in the dollar index to a fresh four-month low supported the rupee, they said.

 

"Importers locked in their positions at each dip before the market stabilised for some time in the day," said a dealer at a brokerage firm. "Oil companies and some corporates too squared off. However, market moved as expected and is no longer as volatile as it was."

 

The rupee settled at 87.1150 a dollar, down 0.2% from the previous close of 86.9550. The rupee had risen to a high of 86.8775 early in the day.

 

A fall in most other Asian currencies also weighed on the Indian unit, dealers said. Barring the Philippines' peso and the Malaysian ringgit, other Asian currencies fell 0.1-0.5%, with the Thai baht being the worst hit.

 

The Indian unit had opened broadly steady against the dollar at 86.9275 and rose to the day's high of 86.8775 a dollar shortly afterwards as the dollar index slipped to a fresh four-month low in early trade after weaker-than-expected US employment data and rise in the euro, dealers said.

 

The dollar index also fell after the US on Wednesday gave a one-month reprieve on tariffs to automakers in Canada and Mexico, as long as they comply with existing free trade rules. This led to expectations that there might be more relief on the cards on the tariff front from the US.

 

However, soon after, banks rushed to purchase dollars on behalf of importers, who wanted to take advantage of the relatively lower dollar/rupee levels, dealers said. "It was obvious that the above 87.00 (a dollar) levels will not sustain. Demand (for dollars) had to come in," said a dealer at a private bank.

 

Noting the appreciation of the rupee and fall in crude oil prices, oil marketing companies stepped in immediately to stock up on dollars, which put the rupee under pressure, dealers said. Crude oil prices fell after US oil stocks rose higher than expected and as investors were worried about plans of the Organization of the Petroleum Exporting Countries and its allies to increase output from April.

 

At 1530 IST, the May Brent crude contract on the Intercontinental Exchange was at $69.49 per barrel, against $69.30 on Wednesday and $71.04 on Tuesday. Brent crude prices had fallen to their lowest in nearly six months on Wednesday.

 

Some banks also purchased dollars ahead of the daily reference rate fixing, following which, the rupee fell below the key level of 87.00 per dollar, dealers said.

 

After the initial strong demand for dollars from importers subsided, the rupee traded around 87.10 a dollar for most of the day. "Importers have already participated in the downward movement till 86.80 (a dollar). There is no reason for them to buy dollars now aggressively at current levels," said a currency trader at a brokerage firm.

 

The dollar index fell further during European trade, which also gave support to 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 104.21, compared to 104.27 on Wednesday and 105.53 on Tuesday.

 

Rise in domestic equities also aided the Indian currency, according to dealers. On Thursday, the benchmark indices – the Nifty 50 and the BSE Sensex – ended 0.9% and 0.8% higher, respectively.

 

	AT 1530 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	87.1150	86.9275	86.8775	87.1600	86.9550
1-year dlr/rupee fwd (paise)	179.70	172.30	179.79	172.30	190.36

 

FORWARDS

The premium on the dollar/rupee forward contracts ended sharply lower across tenures, dealers said, after the Reserve Bank of India on Wednesday said it will conduct a dollar/rupee buy/sell swap auction of $10 billion for a tenor of three years on Mar. 24, in a bid to infuse liquidity into the banking system. Under the swap, the RBI will buy dollars for immediate delivery and sell them for delivery after three years. 

 

As part of its measures to boost liquidity, the central bank will also buy government bonds worth INR 1.00 trillion through open market operation auctions in two tranches this month.

 

Forward premiums also fell due to an overnight rise in US Treasury yields, dealers said. US Treasury yields climbed as investors assessed the latest US economic data while weighing on developments of US President Donald Trump's tariff imposition. Forwards of a currency pair are reflective of the interest rate differential between the two countries.

 

At 1530 IST, the premium on the one-year exact-period dollar/rupee forward contract was 179.70 paise, against 190.36 paise on Wednesday. On an annualised basis, the premium was 2.06%, against the previous close of 2.18%. The premium fell to a low of 1.98% early in the trade, its lowest level since Feb. 24.

 

OUTLOOK

On Friday, the rupee is likely to take cues from the movement of dollar index and crude oil prices, dealers said. The Indian unit will also closely track movement of the offshore Chinese yuan and other Asian currencies, they said.

 

"If dollar weakness sustains for more days, we may see some more rise in rupee," said a dealer at a foreign bank. "The RBI seems to be allowing the rupee to move both ways, not aggressively protecting any level. We are moving in line with other currencies now."

 

Traders are waiting for policy decision of the European Central Bank, which is expected to cut interest rate by a quarter percentage point, taking the benchmark rate to 2.50%. Traders will also closely track any tariff-related news, which may fan the ongoing trade war fears.

 

During the day, the rupee is seen moving in a range of 86.80-87.30 against the dollar, with strong support for the Indian unit pegged at 87.20 a dollar.

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India Rupee - World FX: Euro steady ahead of ECB policy outcome; yen up 0.7%

 

	AT 1513 IST	HIGH	LOW	PREVIOUS
GBP/USD	1.2876	1.2923	1.2869	1.2895
EUR/USD	1.0788	1.0822	1.0780	1.0788
NZD/USD	0.5731	0.5744	0.5721	0.5725
AUD/USD	0.6329	0.6349	0.6325	0.6333
USD/JPY	147.8330	149.3320	147.7890	148.8870
USD/CAD	1.4348	1.4362	1.4323	1.4334
EUR/JPY	159.4720	161.2440	159.4050	160.6230
CHF/USD	1.1271	1.1279	1.1203	1.1226
EUR/CHF	0.9568	0.9635	0.9568	0.9608

 

MUMBAI – The euro was steady against the dollar ahead of the European Central Bank's moentary policy decision, due later in the day, where it is expected to cut its benchmark lending rates by 25 basis points amid sluggish economic growth in the bloc. A rate cut will take the benchmark rate to 2.5% and is fully factored in by market participants.  

 

The US dollar index hit a fresh four-month low on Thursday after the ADP National Employment Report on Wednesday showed that private sector jobs in the US grew by only 77,000 in February, after an upwardly revised 186,000 gain in January. Economists polled by Reuters had forecast private employment rising by 140,000 following a previously reported 183,000 advance in January.

 

The dollar index also fell after the US administration gave a one-month reprive on tariffs for automakers, as long as they comply with existing free trade rules. This led to expectations among investors that there might be more relief on the cards on the tariff front from the US. 

 

At 1515 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 104.22, compared to the previous close of 104.27 and 104.53 on Tuesday. The index fell to a low of 104.02, its lowest level since Nov. 5. 

 

The Japanese yen was up 0.7% against the greenback on rising expectations of a rate hike by the Bank of Japan. On Thursday, Toshitaka Sekine, former chief economist of the Bank of Japan, said the Japanese central bank could raise the policy rates to 2% and a possible hike might be anticipated in May, with more likely in July. 

 

The pound sterling was up 0.2% against the dollar ahead of the construction purchasing managers' index due later in the evening. Bank of England Governor Andrew Bailey on Wednesday urged the US to settle its concerns about the global economy through dialogue rather than tariff imposition. "If you think the world economy is somehow out of balance, the place to address those balances is in a multilateral forum, not by bilateral action," Bailey said.

 

The Australian dollar rose 0.1% against the US unit after data on Thursay showed that Australia's trade surplus increased to $5.6 million in January from $4.9 million the previous month. 

 

The New Zealand dollar was up 0.1% against the greenback. However, a fall in crude oil prices limited gains in the commodity-linked currency. Crude prices declined after US crude oil stockpiles posted a larger-than-expected buildup, adding to headwinds as investors were worried about the Organization of the Petroleum Exporting Countries and its allies' plans to increase output in April.

 

At 1430 IST, the May Brent crude contract on the Intercontinental Exchange was at $69.42 per barrel, compared to its previous close of $69.30 per barrel and $71.04 per barrel on Tuesday. Brent crude prices fell to their lowest in nearly six months on Wednesday. 

 

The Canadian dollar was down 0.1% amid tariff fears among investors. However, the losses were limited after reports that Canada was willing to reduce retaliatory measures against US if US President Donald Trump and his team dropped some of the tariffs imposed on the country. Negotiations between Ottawa and Washington are underway. 

 

The Swiss franc was up 0.3% due to safe-haven gains amid risk-off sentiment among investors.  (Gowri Lakshmi)

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India Rupee:Remains down as importers buy dlrs; weak dlr index limits losses

 

	AT 1255 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	87.0775	86.9275	86.8775	87.1225	86.9550

 

MUMBAI – The rupee remained lower against the dollar on Thursday as banks purchased the greenback on behalf of oil marketing companies and other importers, dealers said. However, losses in the Indian unit were limited as the dollar index slumped to a fresh four-month low on Thursday, they said.

 

"There was significant demand (of dollars) from importers in the morning, but now it has somewhat stabilised. The weak dollar is also favouring rupee," a currency trader at a brokerage firm said. 

 

The rupee pared its gains from early trade and was dragged to a low of 87.1225 a dollar 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. Some banks also purchased the greenback ahead of the daily reference rate, which weighed on the rupee, they said. 

 

Noting a fall in crude oil prices and the attractive dollar/rupee exchange rate, oil marketing companies too stepped in to puchase the greenback to shore up their dollar holdings, dealers said. At 1255 IST, the May Brent crude contract on the Intercontinental Exchange was at $69.86 per barrel, compared to its previous close of $69.30 per barrel and $71.04 per barrel on Tuesday. Brent crude prices fell to their lowest in nearly six months on Wednesday. 

 

However, the dollar index touched a fresh four-month low, which kept the Indian unit well supported, dealers said. The dollar index declined after weaker-than-expected employment data in the US on Wednesday. The euro continued to advance against the dollar on Thursday, touching a four-month peak, as the common-currency bloc's growth prospects improved after Germany proposed a $531-billion infrastructure fund.

 

At 1255 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 104.20, compared to the previous close of 104.27 and 104.53 on Tuesday. The index fell to a low of 104.06 during the day, its lowest level since Nov. 6. 

 

The rupee also got a boost from gains in the domestic stock market, dealers said. At 1255 IST, the benchmark indices – the Nifty 50 and the BSE Sensex – were up 0.5% each. 

 

For the rest of the day the rupee is seen moving in a range of 86.85-87.20 against the dollar. Dealers see strong immediate technical support for the Indian unit at 87.20 a dollar.  (Gowri Lakshmi) 

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India Rupee: Technical Levels for rupee - Mar 6

 

MUMBAI – At 1129 IST, the rupee was at 87.0375 per dollar. At 0900 IST, the rupee was at 86.9275 a dollar, against the previous close of 86.9550. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

 

Participants	S2	S1	R1	R2
State-owned bank	87.10	87.00	86.90	86.85
Brokerage firm	87.30	87.20	86.50	86.40
Brokerage firm	87.20	87.15	86.90	86.85

 

(Gowri Lakshmi and Pratiksha)

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India Rupee: Fwd premiums fall sharply as RBI to hold FX swap auction Mar 24

 

	AT 1010 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	87.0550	86.9275	86.8775	87.1100	86.9550
1-year dollar/rupee forward (paise)	178.00	172.30	178.00	172.30	190.36

 

NEW DELHI – The premium on the dollar/rupee forward contracts fell sharply across tenures after the Reserve Bank of India on Wednesday announced it will conduct a dollar/rupee buy/sell swap auction of $10 billion for a tenor of three years on Mar. 24, in a bid to infuse liquidity into the banking system, dealers said. Under the swap, the RBI will buy dollars for immediate delivery and sell them for delivery after three years. 

 

"Forwards had to come down this much. This (swap auction announcement) was a bit unexpected and sudden for us," said a dealer at private bank. "But, from now I think we should be prepared for such surprises." This will be the third dollar/rupee swap auction by the central bank this year. The RBI had conducted a $5 billion buy/sell swap auction on Jan. 31 for six months, and a $10 billion buy/sell swap auction on Feb. 28 for three years. Both the swap auctions sailed through easily. 

 

Some market participants said that they had braced for more swap auctions after the last one owing to the central bank's large net short outstanding dollar/rupee forward book. "Their forward book is large, so they have to roll over their short positions. These swaps will have to keep happening for that as well," said a dealer at a state-owned bank. The RBI's net outstanding sales of dollar/rupee forward contracts climbed to a new high of $77.53 billion at the end of January, $9.59 billion higher from a month ago. 

 

As a part of its measures to boost liquidity, the central bank will also buy government bonds worth INR 1.00 trillion through open market operation auctions in two tranches this month. 

 

Forward premiums also fell due to an overnight rise in US Treasury yields, dealers said. US Treasury yields climbed as investors assessed the latest US economic data while weighing developments on US President Donald Trump's tariffs. Forwards of a currency pair are reflective of the interest rate differential between the two countries.

 

At 1010 IST, the premium on the one-year exact-period dollar/rupee forward contract was 178.00 paise, against 190.36 paise on Wednesday. On an annualised basis, the premium was at 2.04%, against the previous close of 2.18%. The premium fell to a low of 1.98% in early trade, its lowest level since Feb. 24. (Pratiksha)

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India Rupee: Falls after erasing all gains as oil cos, importers buy dollars

 

	AT 0945 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	87.1050	86.9275	86.8775	87.1100	86.9550

 

MUMBAI – The rupee erased all its early gains and fell sharply against the dollar on Thursday as banks purchased dollars on behalf of oil marketing companies and other importers, dealers said.

 

The rupee touched a high of 86.8775 a dollar in early trade, but fell to 87.1100 shortly afterwards as banks rushed to purchase the greenback on behalf of importers, who wanted to take advamtage of the relatively lower dollar/rupee levels, dealers said. "The rise (in rupee) earlier was just an inital anticipation on how far the rupee can go, but soon enough, traders squared off their dollar holding positions," a dealer at a state-owned bank said.

 

The rupee gained earlier in the day as the dollar index slumped to a four-month low after the ADP National Employment Report on Wednesday showed that private sector jobs in the US grew by only 77,000 in February, after an upwardly revised 186,000 gain in January. Economists polled by Reuters had forecast private employment rising by 140,000 following a previously reported 183,000 advance in January.

 

The dollar index also declined as the euro continued to advance against the dollar, touching a four-month peak, as the common-currency bloc's growth prospects improved after Germany proposed a $531-billion infrastructure fund. The index also fell after the US administration gave a one-month reprive on tariffs for automakers, as long as they comply with existing free trade rules.

 

At 0945 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 104.34, compared to the previous close of 104.27 and 104.53 on Tuesday. The index fell to a low of 104.12 in early trade, its lowest level since Nov. 6. 

 

"If you look at the dollar/rupee movement a couple of months back, dollar weakened against all major currencies but strengthened against INR. That was an exceptional case, but now market has corrected and rupee clearly tracks the movements in dollar, which is now being reflected in levels," a dealer at a state-owned bank said. 

 

During the day, the rupee is seen moving in a range of 86.80-87.20 against the dollar. Dealers see technical support for the Indian unit at 87.20 a dollar. (Gowri Lakshmi)

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India Rupee - Asia FX:Most up as dlr hits 4-mo low; South Korean won up 0.2%

 

MUMBAI – Most Asian currencies rose against the dollar on Thursday as the dollar index slumped to a four-month low in early trade following weaker-than-expected employment data in the US and a rise in the euro. 

 

The ADP National Employment Report on Wednesday showed that private sector jobs in the US grew by only 77,000 in February, after an upwardly revised 186,000 gain in January. Economists polled by Reuters had forecast private employment rising by 140,000 following a previously reported 183,000 advance in January.

 

The euro continued to gain against the dollar, touching a four-month peak, as the common-currency bloc's growth prospects improved after Germany proposed a $531-billion infrastructure fund. The dollar index also fell after the US administration gave a one-month reprive on tariffs for automakers, as long as they comply with existing free trade rules.

 

At 0935 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 104.31, compared to the previous close of 104.27 and 104.53 on Tuesday. The index fell to a low of 104.12 in early trade, its lowest level since Nov. 6. 

 

The South Korean won was up 0.2% against the US dollar. However, the gains were capped as data on Thursday showed that the country's inflation softened in February, the first time in four months. South Korea's consumer price index rose 2.0% on year, against 2.2% in January. The reading was slightly higher than the median of 1.95% in a Reuters poll.

 

After the release of the inflation print, Bank of Korea Deputy Governor Kim Woong said uncertainties pertaining to geopolitical issues remain hightened. "Uncertainties remain high regarding geopolitical situations, trade conflicts among major nations, the foreign exchange rate and domestic demand," Kim said. "Inflation is expected to move around our target level given both downside and upside risks."  

 

The Malaysian ringgit was up 0.1% against the US unit ahead of the a monetary policy decision by the country's central bank, due later in the day, where it is widely expected to keep the lending rate unchanged at 3.0%. 

 

The Philippines' peso was up 0.1% after data showed that the country's unemployment rate declined to 4.3% in January from 4.5% a year ago. The Indonesian rupiah was up 0.1%, while the Thai baht traded flat against the greenback.

 

The Chinese yuan was down 0.1% amid the ongoing tariff war with the US. The Chinese government on Wednesday vowed to "vigourously boost spending" but failed to offer details on the plans, coupled with little money to back it up. 

 

The Taiwan dollar was down 0.2% against the US unit. On Thursday, data showed that Taiwan's foreign exchange reserves remained steady in February at $577.58 billion.  (Gowri Lakshmi)

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India Rupee: Expected range for rupee - Mar 6

 

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:

 

PARTICIPANT	SUPPORT	RESISTANCE
State-owned bank	87.10	86.75
Private bank	87.30	86.80
Private bank	87.15	86.85
Foreign bank	87.20	86.60
Brokerage firm	87.10	86.90
Brokerage firm	87.35	86.65

 

 

 

 

 

 

 

 

 

(Gowri Lakshmi 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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