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Informist, Wednesday, Mar. 12, 2025

By Gowri Lakshmi

MUMBAI – The rupee ended steady against the dollar on Wednesday as a broadly weak dollar index offset the downward impact of banks' dollar purchases for importers, dealers said. Some banks sold dollars, likely for Indian corporates, which provided support to the Indian unit, they said.

"Until a big news on geopolitical front is broken, the rupee trade will be range bound. We have seen rupee to be in the range between 87.15-87.40, which is heavily protected by the central bank, and this trend will continue for some time," a dealer at a brokerage firm said.

After moving in a range of 14 paise, the rupee settled at 87.2075 against the dollar, little changed from its previous close of 87.2125 to a dollar. A fall in most other Asian currencies also weighed on the rupee, according to some dealers. Most other Asian currencies fell between 0.1-0.3% against the greenback, with the Malaysian ringgit being the worst performer.

The rupee opened lower at 87.2750 against the dollar on Wednesday due to a recovery in the dollar index in early Asian trade, dealers said. The dollar index recovered slightly from the near five-month low it hit on Tuesday after data showed job openings in the US increased more than expected in January. The Job Openings and Labour Turnover Survey showed job openings increased by 232,000 to 7.74 million in January, while layoffs declined by 34,000. A poll by Reuters had forecast the job openings at 7.63 million. 

However, the recovery in the US currency was limited as investors continued to prefer other safe-haven currencies such as the Japanese yen and the Swiss franc due to uncertainties pertaining to US President Donald Trump's teetering trade policies. 

At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 103.51, compared to 103.42 on Tuesday and 103.90 on Monday. Earlier in the day, the index rose to a high of 103.71. 

The rupee came under pressure shortly after the market opened as banks rushed to purchase the greenback on behalf of importers, dealers said. Meanwhile, some banks sold dollars, likely on behalf of foreign portfolio investors, they said. Temasek, Singapore's sovereign investment firm, has acquired about a 10% stake in Haldiram's for approximately $1 billion, as per reports.

Some foreign banks also sold dollars for Indian corporates, which supported the rupee, dealers said. They sold dollars on expectations that the rupee may strengthen against the greenback in coming days. "Corporates who were earlier long on dollars is now going short. If the rupee had risen to 87.15, which it was close to today (Wednesday), panic selling of dollars would have hit," a dealer at a state-owned bank said.

FORWARDS 

The premium on the one-year dollar/rupee forward contract ended largely steady as market participants refrained from placing big bets ahead of the US CPI data, dealers said. However, some banks sold forward dollars, which put downward pressure on the premiums, they said.

Some banks sold dollars for forward delivery, noting that premiums would come down as the date of the Reserve Bank of India's $10-billion dollar/rupee buy/sell swap nears. A rise in the benchmark 10-year US Treasury yield also pushed premiums down, dealers said. Forwards of a currency pair are reflective of the interest rate differential between two countries.

At 1530 IST, the premium on the one-year exact-period dollar/rupee forward contract was 188.64 paise, against 189.63 paise Tuesday. On an annualised basis, the premium was 2.16% against the previous close of 2.17%.

OUTLOOK 

On Thursday, the rupee will take cues from the movement in the dollar index after the US February CPI data due later in the day, dealers said. The inflation print is expected to rise 0.3%, according to a Dow Jones poll. In January, the inflation had risen 0.5%. Core CPI is expected to have risen 0.3% last month, after rising 0.4% in January. On an annual basis, inflation is seen at 2.9% in February against 3.0% the previous month.

Investors would also assess India's CPI inflation, which eased to 3.61% in February, below the Reserve Bank of India's 4% target. It was also way below the expectation of 3.9% in an Informist poll. The inflation print was 4.26% in January.

The rupee will also take cues from the movement in the offshore Chinese yuan. Dealers expect some banks to step in with dollar sales, possibly on behalf of the RBI, to prevent the rupee 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. Dealers see technical support for the Indian unit at 87.40 a dollar. 

India Rupee - World FX: Euro steady; traders assess EU retaliatory tariffs

MUMBAI – The euro was steady against the dollar as market participants assessed retaliatory tariffs announced by the European Union and a speech by European Central Bank President Christine Lagarde. She said the central bank is likely to miss inflation targets more often in future due to "exceptionally high" global uncertainties. She said the higher public borrowing for defense and infrastructure investment and the potential trade war with the US "might feed into inflation more directly and increase volatility."

Before her speech, the euro had fallen briefly after the EU announced retaliatory tariffs on about $28 billion worth of US goods on Wednesday. The first tranche of the retaliatory measures is set to take effect at the beginning of April, and the second tranche of tariff imposition would follow in mid-April, The Wall Street Journal reported. The bloc said it would reverse the retaliatory measures if an agreement was reached with Washington.

Market participants now look forward to further developments on the Russia-Ukraine ceasefire, brokered by the US. On Wednesday, Ukraine accepted a truce proposal by the US for an immediate 30-day ceasefire during talks with US officials in Saudi Arabia. However, Russia said it is yet to be briefed by the US on the ceasefire proposal.  

The dollar index erased gains and was steady. Investors keenly await the release of the US consumer price index for February, due later in the day. According to a Dow Jones poll, the core CPI is expected to have risen 0.3% in February compared with 0.4% in January. On an annual basis, the CPI is seen at 2.9% in February from 3.0% a month earlier. Earlier in the day, the index hit a high of 103.71.

The dollar index had recovered and was up in Asian trade. The index recovered after data released Tuesday showed job openings in the US increased more than expected in January. The Job Openings and Labour Turnover Survey showed job openings increased by 232,000 to 7.74 million in January, while layoffs declined by 34,000. A poll by Reuters had forecast the job openings at 7.63 million. 

At 1455 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 103.49, against 103.42 on Tuesday and 103.90 on Monday. On Tuesday, the index had fallen to 103.22, the lowest since Oct. 16. The pound sterling was down 0.1%.

The Japanese yen was down 0.4% against the greenback. However, losses in the Japanese currency were limited after inflation data earlier in the day reinforced the view about a rate hike by the Bank of Japan. Japan's annual wholesale inflation hit 4.0% in February, in line with market expectations. Bank of Japan Governor Kazuo Ueda on Wednesday said the recent rise in bond yields was a natural reflection of market expectations of future interest rates by the central bank.

The Canadian dollar was flat against the US currency ahead of the monetary policy decision by the Bank of Canada due later in the day, where the central bank is widely expected to lower interest rates by 25 basis points. Moreover, trade relations between the US and Canada heated up after US President Donald Trump vowed to double tariffs on steel and aluminum imports to 50% but quickly backed off. The move came after Ontario Premier Doug Ford agreed to suspend plans to impose a 25% surcharge on electricity exports to the US. Ford will meet US Commerce Secretary Howard Lutnick in Washington on Thursday. The White House later announced that the previously planned 25% tariff would take effect on Wednesday. 

The Australian dollar and the New Zealand dollar traded flat against the US unit, while the Swiss franc was up 0.1% due to safe haven inflows.  (Gowri Lakshmi)

India Rupee: Premium steady as traders avoid large bets ahead of US CPI

MUMBAI – The premium on the one-year dollar/rupee forward contract was steady as market participants largely refrained from placing big bets ahead of the US CPI data, dealers said. However, some banks sold forward dollars, which put downward pressure on the premiums, they said.

"Though there is some movement in absolute basis, in percentage terms, the levels are largely the same," a dealer with a state-owned bank said. "Today, most of the people are waiting for US CPI, and also in general, they are receiving before the swap."

Some banks sold dollars for forward delivery, noting that premiums would come down as the date of the Reserve Bank of India's $10-billion dollar/rupee buy/sell swap nears. On Mar. 5 the RBI had announced that it would hold the swap auction on Mar. 24 to infuse liquidity into the banking system.

The US CPI data for February is set to be released later in the day, with a poll by Dow Jones pegging the sequential rise at 0.3%. In January, the inflation had risen 0.5%. Core CPI is expected to have risen 0.3% last month, after rising 0.4% in January. On a yearly basis, the CPI is seen at 2.9% in February against 3.0% the previous month.

A rise in the benchmark 10-year US Treasury yield also pushed premiums down, dealers said. Forwards of a currency pair are reflective of the interest rate differential between two countries.

At 1425 IST, the premium on the one-year exact-period dollar/rupee forward contract was 188.14 paise, against 189.63 paise Tuesday. On an annualised basis, the premium was 2.16% against the previous close of 2.17%.  (Sourabh Kumar)

India Rupee: Steady as some FPI flows offset importers' dollar buys

MUMBAI – The rupee was steady as some foreign fund inflows offset the impact of importers' dollar purchases, dealers said. A recovery in the dollar index limited the upside in the Indian currency, they said. 

"After rising to near 87.17 in the morning, people were expecting it would go even higher, but when the levels did not seem to go further up, importers entered the market," a dealer with a state-owned bank said. "But some selling has come later on, probably for Temasek investment in Haldiram." Temasek, Singapore's sovereign investment firm, has acquired about 10% stake in Haldiram's for approximately $1 billion, as per reports.

Some foreign banks also sold dollars on behalf of a few Indian corporates, which lmited the fall in the Indian currency, dealers said. Market participants hold the view that the weakness in the dollar index would continue at least until Apr. 2, when the reciprocal tariffs by the US are set to be implemented.

A recovery in the dollar index weighed on the rupee, dealers said. A fall in the euro against the dollar led to a recovery in the dollar index in early European trade. The euro, which carries a weightage of 57.6% in the index, was down 0.1% after the European Union announced retaliatory tariffs on about $28 billion worth of US goods on Wednesday, triggering the fear of a global trade war. 

At 1255 IST, the dollar index, which measures the strength in the dollar against a basket of six major currencies, was at 103.64, compared with 103.42 on Tuesday and 103.90 on Monday. On Tuesday, the index had fallen to 103.22, the lowest since Oct. 16.

A fall in the domestic equities also weighed on the rupee, according to dealers. At 1342 IST, benchmark indices Nifty 50 and BSE Sensex were down 0.4% and 0.3%, respectively. 

For the rest of the day, the rupee is seen moving in a range of 87.10-87.40 against the dollar. Dealers see strong immediate technical support for the Indian unit at 87.40 a dollar.  (Gowri Lakshmi and Sourabh Kumar)

India Rupee: Technical Levels for rupee - Mar 12

MUMBAI – At 1030 IST, the rupee was at 87.2100 per dollar. At 0900 IST, the rupee was at 87.2750 a dollar, against the previous close of 87.2150. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Sourabh Kumar)

India Rupee - Asia FX: Mixed; Philippines peso dn as mkt sees more rate cuts

MUMBAI – Asian currencies traded on a mixed note on Wednesday as investor sentiment continues to be jittery due to uncertainties pertaining to US President Donald Trump's trade policies. Despite a slight recovery, gains in the US dollar were capped as investors continued to move their funds to other safe-haven currencies such as the Japanese yen and the Swiss franc.

The dollar index recovered slightly after data on Tuesday showed job openings in the US increased more than expected in January. The Job Openings and Labour Turnover Survey showed job openings increased 232,000 to 7.74 million in January, while layoffs declined 34,000. A poll by Reuters had forecast the jobs openings at 7.63 million. 

At 0903 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 103.57, compared to 103.42 on Tuesday and 103.90 on Monday. On Tuesday, the index had fallen to 103.22, the lowest since Oct. 16. Market participants now await the US consumer price index for February, due later in the day.

The Malaysian dollar was down 0.4%, tracking losses in the domestic stock market. At 0907 IST, the benchmark Kuala Lampur Composite Index was down 1.4%. Losses in the Indonesian rupiah were limited due to gains in the domestic stock market; the Jakarta Composite Index was up 1.2% at 0907 IST.  

The Thai baht was down 0.1% against the greenback. Thailand's finance minister, Pichai Chunhavajira, on Tuesday said he would form a committee to choose the next central bank governor. The incumbent givernor's term ends in September. 

The Philippines peso was down 0.2% after reports that the Philippines' central bank was considering more interest rate cuts. Central bank governor Eli Remolona said "a few more rate cuts" were on the table this year. The central bank will meet for its monetary policy decision on Apr. 10. 

The South Korean won was up 0.1% as the country's jobless rate dropped to 2.7% in February from 2.9% in January. This was the second consecutive month that South Korea reported a decline in its unemployment rate. 

The Chinese yuan was flat against the US dollar on Wednesday. On Tuesday, China concluded the National People's Congress with a call to "struggle unrelentingly" for the country's rise amid tense relations with the US. The Taiwan dollar was down 0.2%. The losses were limited as the benchmark index, the Taiwan Stock Exchange Capitalization Weighted Stock Index, was up 1.3% at 0917 IST.  (Gowri Lakshmi)

India Rupee: Erases losses as FPI dollar sales outweigh recovery in dlr index

MUMBAI – The rupee erased all losses against the dollar in early trade Wednesday as some foreign banks sold dollars for foreign fund inflows, which offset the impact of a recovery in the dollar index from a near five-month low hit on Tuesday, dealers said. 

"The rupee opened lower because of the dollar index, but we expect it (rupee) to again come back to yesterday's (Tuesday's) level," a dealer with a state-owned bank said. The rupee opened lower at 87.2750 a dollar on Wednesday.

Some importers also purchased the greenback, which weighed on the rupee, dealers said, adding that while some importers demanded dollars at present levels, most of them waited for the dollar/rupee to fall more before placing large bets. "Most of them are waiting, and would want to be long around 87.10 and are looking to be short at 87.35 a dollar," the dealer with the state-owned bank said. 

Most exporters were on the sidelines, waiting for the rupee to fall below at least 87.35 a dollar, before placing significant bets, dealers said. Later in the day, the rupee is expected to rise due to expectations that the dollar index may come down in European trade, dealers said. 

The dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 103.58 at 0920 IST, against 103.42 on Tuesday and 103.90 on Monday. The dollar index recovered after the release of jobs data on Tuesday, which showed job openings in the US increased more than expected in January.

The recovery in the dollar index was, however, limited as investors continue to prefer other safe-haven currencies such as the Japanese yen and the Swiss franc. Market participants would be waiting for the release of the US February CPI data, due later in the day.

For the rest of the day, the rupee is seen moving in a range of 87.10-87.40 against the dollar. Dealers see strong immediate technical resistance for the Indian unit at 87.10 a dollar.  (Sourabh Kumar)

India Rupee: Expected range for rupee - Mar 12

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:

(Gowri Lakshmi and Sourabh Kumar)

End

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

Edited by Saji George Titus

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