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Informist, Friday, Mar. 7, 2025

By Pratiksha

NEW DELHI – The rupee ended near its two-week high against the dollar as the dollar index continued to tumble and hit a more than four-month low in European trade, dealers said. "It was just a dollar reflected move throughout in the rupee. The RBI (Reserve Bank of India) seems to be tolerant to appreciating rupee for now. We are not underperformers anymore," said a dealer at a private bank. "But now we need to see if 86.80 (a dollar) will break or not."

The Indian currency settled at 86.8725 a dollar, appreciating 0.3% from the previous close of 87.1150 a dollar. The rupee moved in a range of 35 paise during the day. The Indian currency appreciated 0.7% against the dollar this week.

Other Asian currencies rose between 0.1% and 0.4% against the dollar, with the South Korean won being the best performer. Rise in other Asian units also supported the Indian unit, according to dealers.

The rupee started the day largely steady against the dollar, but fell to the day's low of 87.2200 a dollar shortly afterwards, as banks rushed to buy dollars on behalf of importers, who were wary of a sharp fall in the rupee due to the ongoing uncertainty around US tariffs, dealers said.

The rupee also came under pressure as banks bought dollars for forward delivery on behalf of importers, noting the relatively lower forward premium levels, according to dealers. On Thursday, the premium on the one-year forward contract fell to 1.98% during the day, its lowest level since Feb. 24.

"If one is booking forward for importers, both spot and forwards has to be done. We are seeing a lot of importers and corporates paying in forwards, so that is reflecting in spot also," a dealer at a state-owned bank said. However, dealers said some importers remained on the sidelines expecting the Indian unit to appreciate further owing to sustained weakness in the US unit.

Some foreign banks also bought dollars on behalf of overseas investors, who continued to exit the Indian financial markets. So far in 2025, foreign portfolio investors have net withdrawn $11.19 billion worth of assets from the domestic market.

However, during the second half of the day, the rupee erased all of its losses and rose sharply above the key 87.00-per-dollar mark as the dollar index declined further during European trade, dealers said. "The rupee was actively tracking the euro and the dollar movement in the end was very sharp. I was not expecting this much," said a dealer at a foreign bank. 

The dollar index slumped after US President Donald Trump on Thursday suspended the 25% tariffs he imposed on Canada and Mexico. The exemptions on the two countries will expire on Apr. 2, when Trump has threatened to impose a global regime of reciprocal tariffs on all US trading partners.

The index also slipped as other safe-haven currencies, the yen and Swiss franc, advanced due to risk-averse sentiment amid the constantly shifting US tariff policies and worries over the potential impact of Trump's tariffs on the US economy. The Swiss franc rose 0.7% against the dollar, while the yen was up 0.4%. 

At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 103.63, compared with 104.14 on Thursday and 104.27 on Wednesday. The index declined to 103.56 on Friday, its lowest level since Nov. 5.

"Dollar index moving down is the main reason for the downward move in dollar/rupee. To a certain extent, the rupee's outlook may have changed but broadly I think we will still head towards 90 (a dollar) gradually by December or so. 90 is still on the card for this calendar year," said Sajal Gupta, executive director and head of forex and commodities at Nuvama Institutional Equities.

Some dealers said banks sold dollars for foreign fund inflows into a big corporate, which also boosted the Indian unit. The local currency touched a high of 86.8700 a dollar during the day.

Meanwhile, some market participants remained cautious and refrained from placing large bets ahead of the release of the US non-farm payrolls report later in the day. The key economic data will influence market expectations of rate cuts by the Federal Reserve. The US is expected to have added 160,000 jobs last month, according to a poll by Reuters.

FORWARDS

The premium on the one-year dollar/rupee forward contract ended higher as banks bought dollars for forward delivery on behalf of importers, noting relatively lower levels, dealers said. On Thursday, the premium on the one-year forward contract fell to 1.98% during the day, its lowest level since Feb. 24, as the Reserve Bank of India on Wednesday announced it would conduct a dollar/rupee buy/sell swap auction of $10 billion for a tenor of three years on Mar. 24.

Dealers said appreciation of the rupee also prompted importers to buy dollars for forward delivery. A fall in US Treasury yields also aided forward premiums, dealers said.

The benchmark 10-year US Treasury yield fell due to concerns about a potential economic slowdown in the US after a slew of recent soft economic data and due to the impact of the US administration's tariff plans. 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 183.93 paise, against 179.70 paise on Thursday. On an annualised basis, the premium was at 2.12%, against the previous close of 2.06%.

OUTLOOK

On Monday, the rupee will take cues from the movement of the dollar index after the release of the US non-farm payrolls report later in the day, dealers said. The Indian unit will also take cues from movement of the Chinese yuan and crude oil prices, they said.

"The non-farm payroll report is of significance, since the last few data points have had a lot of bearing on the dollar index. If this one surprises too, we may be seeing more volatility on Monday," said a dealer at a state-owned bank. A slew of recent economic data indicated that the US economy is slowing down.

Dealers expect the RBI to intervene through dollar purchases if the domestic unit rises above 86.80 a dollar, in order to replenish its foreign exchange reserves. "I don't see rupee trading below 86.50, even 86.80 should not be taken out. RBI will keep on buying at lower levels and shore up reserves. So they will neither let the rupee weaken substantially, nor strengthen for sure. 86.50-86.80 is the best case scenario for us as of now," Gupta said.

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

India Rupee - World FX: Euro up 0.6% on expectation ECB may hold rates Apr

NEW DELHI – The euro jumped 0.6% against the dollar as the European Central Bank cut interest rates by 25 basis points on Thursday but warned of "phenomenal uncertainty" and price pressure risks from trade wars, which increased prospects of a pause by the central bank next month. The ECB cut the deposit rate to 2.5% amid slowing inflation and slowing economic growth. 

The dollar index slumped to a fresh over four-month low during European trade after US President Donald Trump on Thursday suspended the 25% tariffs he imposed on Canada and Mexico. The exemptions on the two countries will expire on Apr. 2, when Trump has threatened to impose a global regime of reciprocal tariffs on all US trading partners. 

The index also slipped as other safe-haven currencies, the yen and swiss franc, advanced due to risk-averse sentiment amid the constantly shifting US tariff policies and worries over the potential impact of Trump's tariffs on the US economy. The Swiss franc gained 0.7% against the dollar, while the yen was up 0.4%. 

The yen also rose after Japan's economy minister Ryosei Akazawa said on Friday that the country had cleared the key threshold for the government to officially declare an end to long-term price deflation, underlining the government's optimism around the economic outlook of the country. Further, Reuters reported citing sources on Friday that inflationary pressure from wage gains and a sustained rise in food costs could lead to the Bank of Japan board members discussing another interest rate hike as soon as in May. 

At 1440 IST, the dollar index, which measures the strength in the dollar against a basket of six major currencies, was at 103.69, compared with 104.14 on Thursday and 104.27 on Wednesday. The index dropped to 103.65 on Friday, its lowest level since Nov. 5. The pound sterling gained 0.3% against the greenback, tracking a slump in the dollar index. 

The risk-sensitive Australian dollar fell 0.3% against the dollar owing to weak risk sentiment among investors amid an escalating global trade war and Trump's fluctuating tariff plans. The New Zealand dollar was down 0.1% against the US unit, tracking the Australian dollar. (Pratiksha)

India Rupee: Premium rises as importers buy fwd dollars noting low levels

NEW DELHI – The premium on the one-year dollar/rupee forward contract rose as banks bought dollars for forward delivery on behalf of importers, noting relatively lower levels, dealers said. "Forwards fell sharply yesterday (Thursday), so importers are booking these levels. I think forwards will not fall beyond this for now. It will fall maybe on the day of the swap auction as the cut-off may come quite low," said a dealer at a state-owned bank. 

On Thursday, the premium on the one-year forward contract fell to 1.98% during the day, its lowest level since Feb. 24, as the Reserve Bank of India on Wednesday announced it would conduct a dollar/rupee buy/sell swap auction of $10 billion for a tenor of three years on Mar. 24. 

Dealers said apprecation in the rupee also prompted importers to buy dollars for forward delivery. The Indian currency has appreciated 0.5% against the dollar this week. 

A fall in US Treasury yields also aided forward premiums, dealers said. The benchmark 10-year US treasury yield fell due to concerns about a potential economic slowdown in the US after a slew of recent soft economic data and due to the impact of the US administration's tariff plans. Forwards of a currency pair are reflective of the interest rate differential between the two countries.

Meanwhile, some market participants remained cautious and refrained from placing large bets ahead of the release of the US non-farm payrolls report later in the day. The key economic data will influence market expectations of rate cuts by the Federal Reserve. 

At 1340 IST, the premium on the one-year exact-period dollar/rupee forward contract was 183.43 paise, against 179.70 paise on Thursday. On an annualised basis, the premium was at 2.11%, against the previous close of 2.06%. (Pratiksha)

India Rupee: Rises after paring all losses as dlr index hovers near 4-mo low

MUMBAI – The rupee erased all earlier losses and rose slightly against the dollar on Friday as the dollar index hovered near its four-month low, dealers said. Other Asian currencies also strengthened tracking a fall in the dollar index, which lent support to the Indian unit, they said. 

"The dollar index continue to remain on the weaker side, we can see it weakening against yen and euro... it even weakened against the CNY (offshore chinese yuan) earlier," a dealer at a public-sector bank said. 

The dollar index tumbled to a fresh four-month low on Thursday after US President Donald Trump suspended the 25% tariffs he imposed on Canada and Mexico. The exemptions on the two countries will expire on Apr. 2, when Trump has threatened to impose reciprocal tariffs on all US trading partners. 

On Friday, the dollar index fell tracking strength in the euro and the Japanese yen. Both the euro and the yen were up 0.4% against the dollar. "It is very diffcult to tell the impact and general mood of investors...one day he (Trump) imposes tariff and another day he takes back," said the dealer at a public-sector bank. "I guess as long as a tariff isn't directly imposed on India, we may not experience the brunt until then."

At 1255 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 103.89, compared to 104.14 on Thursday and 104.27 on Wednesday. The index had hit 103.76 on Thursday, its lowest level since Nov. 5.

Earlier in the day, the rupee fell to a low of 87.2200 a dollar as banks bought dollars on behalf of importers and foreign portfolio investors, dealers said. Some banks also purchased the greenback ahead of the daily reference rate, which weighed on the rupee, they said. 

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 86.90 a dollar.  (Gowri Lakshmi) 

India Rupee: Technical Levels for rupee - Mar 7

MUMBAI – At 1142 IST, the rupee was at 87.1650 per dollar. At 0900 IST, the rupee was at 87.1200 a dollar, against the previous close of 87.1150. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Gowri Lakshmi and Pratiksha)

India Rupee - Asia FX: Mixed; Malaysia's central bank holds rates

MUMBAI – Asian currencies moved on a mixed note against the dollar on Friday, even as the dollar index hovered near its four-month low, as traders assessed US President Donald Trump's ever-shifting tariff plans. Market participants also await US non-farm payrolls data and a speech by Federal Reserve Chair Jerome Powell later in the day, for more cues on the US economic outlook.

The dollar index fell to a fresh four-month low on Thursday after Trump announced the suspension of the 25% tariffs he had imposed on Canada and Mexico, the latest move in his teetering trade policy. The exemptions on the two countries will expire on Apr. 2, when Trump has threatened to impose reciprocal tariffs on all US trading partners.

"On April 2, we're going to move with the reciprocal tariffs, and hopefully Mexico and Canada will have done a good enough job on fentanyl that this part of the conversation will be off the table, and we'll move just to the reciprocal tariff conversation," Commerce Secretary Howard Lutnick told CNBC. "But if they haven't, this will stay on."

At 1015 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 104.13, compared to 104.14 on Thursday and 104.27 on Wednesday. The index dropped to 103.76 on Thursday, its lowest level since Nov. 5. 

The Malaysian ringgit was down 0.2% against the greenback. Malaysia's central bank, Bank Negara Malaysia, on Thursday left its benchmark lending rates unchanged at 3.0%, in line with market expectations. The central bank maintained status quo amid stable inflation and steady economic growth.

The Thai baht was flat against the greenback. On Friday, the Thai Chamber of Commerce called on the government to create a war room to tackle tariff threats from Washington. The private sector is concerned such tariffs could significantly affect Thailand's economy, depressing growth to less than 3%, according to reports.

The Taiwan dollar and the Chinese yuan were steady against the dollar. Chinese authorities on Thursday vowed more monetary policy easing "at an appropriate time" and left the door open to more economic stimulus measures. The People's Bank of China will cut the reserve requirement ratio and interest rates this year based on domestic and global factor. "The current average RRR for financial institutions stands at 6.6 percent, leaving room for further reductions," Chinese central bank Governor Pan Gongsheng said.

The Indonesian rupiah traded flat against the US dollar. Indonesia's central bank on Thursday said it would conduct currency intervention whenever necessary. The Philipines' peso was up 0.1% against the US unit. Data on Friday showed that the manufacturing prodcution in the Philippines' rose to 4% on year in January, following a 0.4% increase in December.

The South Korean won was up 0.1%. Data from the country's central bank on Friday showed South Korea posted a current account surplus in January, the 21st consecutive month of surplus. The country's current account surplus reached $2.94 billion in January.  (Gowri Lakshmi)

India Rupee: Down as bks buy dlrs for importers, FPIs; weak dlr index helps

MUMBAI – The rupee fell against the dollar on Friday as banks purchased the greenback on behalf of importers and likely foreign portfolio investors, dealers said. "There is buying (of dollars) today. There is no rush for dollars but its mostly importers at this moment," said a dealer at a state-owned bank. 

The rupee was weighed as banks bought dollars for importers, who are wary of a sharp fall in the rupee amid the ongoing uncertianty around US tariffs, dealers said. Further, some foreign banks also bought dollars on behalf of overseas investors, who continued to exit the Indian financial markets. So far in 2025, FPIs have net withdrawn $11.19 billion worth of assets from the domestic market. 

However, losses in the currency were limited as the dollar index continued to wallow near its four-month low, which it hit on Thursday. The index declined after US President Donald Trump, on Thursday, suspended the 25% tariffs he imposed on Canada and Mexico. The exemptions on the two countries will expire on Apr. 2 when Trump has threatened to impose a global regime of reciprocal tariffs on all US trading partners. 

At 1000 IST, the dollar index, which measures the strength in the dollar against a basket of six major currencies, was at 104.12, compared with 104.04 on Thursday and 104.27 on Wednesday. The index dropped to 103.76 on Thursday, its lowest level since Nov. 5.

Dealers expect the rupee to remain under pressure during the day as they see consistent dollar demand from importers and FPIs for a majority of the day. "Right now the market hasn't moved much. But once European markets open, we can expect some kind of volatility, dollar demands and more outflows from equity," said the dealer from a state-owned bank. 

During the day, the rupee is seen moving in a range of 86.90-87.20 against the dollar. Dealers see a technical support for the Indian unit at 87.20 a dollar.(Gowri Lakshmi)

India Rupee: Expected range for rupee - Mar 7

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:

(Pratiksha and Gowri Lakshmi)

End

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

Edited by Ashish Shirke

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