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Informist, Thursday, Mar. 13, 2025

By Sourabh Kumar

MUMBAI – On a day when overall volumes in the currency market were low due to technical issues with the Refinitiv's foreign exchange trading platform, the rupee ended sharply higher against the dollar, as some banks sold the greenback for overseas investors, dealers said. 

"Some good selling was there from some banks, probably flows into some corporates," a dealer with a foreign bank said. "We heard some of it was due to the investment in Haldiram's, but overall volume was very dry today (Thursday)." Temasek, Singapore's sovereign investment firm, has acquired about a 10% stake in Haldiram's for approximately $1 billion, as per reports. 

After moving in a range of around 20 paise, the rupee settled at 86.9975 to a dollar on Thursday. It had closed at 87.2075 a dollar on Wednesday. Financial markets in India will remain closed on Friday due to Holi. 

While the rupee opened higher against the dollar on Thursday, most dealers could not pinpoint the exact dollar/rupee levels in the first few minutes due to the glitch in Refinitiv's FX trading platform. It led to sharp, exaggerated movements in the dollar/rupee in early trade, dealers said. While most banks were facing the issue, the trading platform was working fine for others as they were using an alternative method to access it, dealers said. 

"We were already using the internet-based method to access the trading platform, but yes, systems on leased lines faced issues today (Thursday)," a dealer with a private bank said. Some of the banks which faced issues with trading on Refinitiv switched to the Clearing Corporation of India Ltd's FX-CLEAR platform for currency trading, dealers said. 

The overall volume in the market was also lower than usual as some traders had left for the annual meeting of the Foreign Exchange Dealers' Association of India from Mar. 14 to Mar. 16 in Zurich in Switzerland. While one set of dealers have already left for Zurich, some others will leave tonight. 

While some foreign fund inflows supported the rupee, importers purchased dollars, which capped the rise in the Indian currency. Importers demanded the greenback, noting a relatively lower dollar/rupee level, dealers said. The Indian unit rose to the day's high of 86.9425 a dollar earlier in the day.

The dollar index rose slightly during the day, however, it was still broadly lower. "The outlook for rupee is no longer on continous downside, and with the weakness in the dollar index, I expect the rupee to rise further to about 86.50 a dollar by the end of March," a dealer with a state-owned bank said. 

However, a broader rise in the rupee may be capped, as some dealers expect the RBI to purchase the greenback, should the rupee rise sharply, to shore up its foreign exchange reserves.

The dollar index, which measures the strength of the greenback against a basket of six major currencies, was 103.66 at 1530 IST against 103.57 on Wednesday and 103.42 on Tuesday.

FORWARDS 

The premium on the one-year dollar/rupee forward contract fell Thursday on rising expectations of a rate cut by the Reserve Bank of India at its policy review meeting in April as CPI inflation for February was lower than expected, dealers said.

Data released Wednesday showed India's headline CPI inflation fell below the RBI's medium-term target of 4% for the first time in six months in February even as core inflation rose to a 15-month high. CPI inflation moderated to a seven-month low of 3.61% in February from a revised 4.26% in January. According to an Informist poll, the headline inflation was seen at 3.9% in February.

The lower than expected CPI inflation has raised market expectations that the RBI will cut its key repo rate by another 25 basis points when its Monetary Policy Committee meets for three days beginning Apr. 7.

At 1530 IST, the premium on the one-year exact-period dollar/rupee forward contract was 186.01 paise, against 188.64 paise Wednesday. On an annualised basis, the premium was 2.14% against the previous close of 2.16%.

OUTLOOK 

The currency market is closed on Friday on account of Holi. On Monday, the rupee will take cues from the movement in the dollar index, dealers said. The rupee will also track the movement in Asian currencies in early trade Monday, dealers said. 

Dealers expect importers to continue purchasing dollars, which may put the rupee under pressure. However, some banks are likely 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. 

After assessing US inflation data released Wednesday, market participants await the release of the US producer price index and weekly unemployment data, due later in the day. Market participants will also look forward to any announcement on tariffs by the US or any other country, dealers said.

During the day, the rupee is seen moving in a range of 86.90-87.40 against the dollar. Dealers see technical resistance for the Indian unit at 86.90 a dollar. 

India Rupee - World FX: Yen firm; Canadian dollar unchanged despite rate cut

MUMBAI – The yen was firm against the dollar on Thursday as odds of a rate hike by the Bank of Japan rose amid rising inflation in the country. The yen rose 0.1% against the dollar. Japanese firms agreed to significant wage hikes for the third straight year to help workers cope with inflation and address labour shortages. Higher wages are expected to boost consumer spending and contribute to rising inflation. 

On Thursday, Bank of Japan Governor Kazuo Ueda expressed optimism on consumption and reiterated the bank's commitment to reducing its "excessively large" balance sheet, indicating it was determined to guide the economy away from monetary stimulus. While the central bank is expected to leave rates unchanged at next week's policy meeting, over two-thirds of economists polled by Reuters expect a rise of 25 basis points to 0.75% in the third quarter, most likely in July. 

The dollar remained firm due to safe-haven appeal amid uncertainty around tariffs imposed by US President Donald Trump. A lower-than-expected US CPI print, however, exerted pressure on the greenback. Inflation data from the US showed that consumer prices increased 0.2% in February, slower than January's 0.5% rise. On a yearly basis, the core CPI increased 3.1%, less than the previous month's 3.3% increase, but more than the expectation of 2.7%.

Investors also assessed Trump's comments on Wednesday, in which he threatened to impose more tariffs on goods from the European Union, if the bloc did not roll back its counter tariffs. His threats came after the EU announced counter tariffs on $28 billion worth of US goods in response to tariffs by the US. 

The dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 103.65 at 1548 IST, against 103.57 on Wednesday and 103.42 on Tuesday.

The euro was down 0.1% against the dollar after European Central Bank policymaker and Bundesbank President Joachim Nagel warned in a BBC interview on Thursday, "US trade tariffs on the European Union could push Germany into recession this year."

The Canadian dollar was largely unchanged against the greenback despite the Bank of Canada cutting its benchmark interest rate by 25 basis points on Wednesday, citing trade uncertainty with the US. The central bank estimates a protracted trade war could knock 3% off Canada's growth over the next two years. The bank also estimates investment in Canada could decline 12% and exports could fall by 8.5% after the first year. (Kabir Sharma)

India Rupee: Premiums down as mkt sees RBI cut rate in Apr as Feb CPI benign

MUMBAI – The premium on the one-year dollar/rupee forward contract was down Thursday on rising expectations of a rate cut by the Reserve Bank of India at its policy review meeting in April as CPI inflation for February was lower than expected, dealers said.

"Premiums have come down largely because of India CPI, as it has come below 4.0%," a dealer with a state-owned bank said. "I think the levels are likely to stay lower before RBI's $10 billion swap."

Data released Wednesday showed India's headline CPI inflation fell below the RBI's medium-term target of 4% for the first time in six months in February even as core inflation rose to a 15-month high. CPI inflation moderated to a seven-month low of 3.61% in February from January's revised lower print of 4.26%. CPI Inflation was 5.09% in February 2024. According to an Informist poll, the headline inflation was seen at 3.9% in February.

The lower than expected CPI inflation has raised market expectations that the RBI will cut its key repo rate by another 25 basis points when its Monetary Policy Committee meets for three days beginning Apr. 7.

Dealers expect forward premiums to stay lower before the RBI's $10-billion dollar/rupee buy/sell swap auction on Mar. 24. In the swap, the central bank will buy dollars for immediate delivery and sell them for delivery after 36 months to meet the durable liquidity needs of the system.

A rise in the benchmark 10-year US Treasury yield also pushed premiums lower, dealers said. The yield on the 10-year US Treasury note rose after a lower-than-expected US inflation numbers on Wednesday. Forwards of a currency pair are reflective of the interest rate differential between two countries.

At 1409 IST, the premium on the one-year exact-period dollar/rupee forward contract was 185.68 paise, against 188.64 paise Wednesday. On an annualised basis, the premium was 2.13% against the previous close of 2.16%.  (Sourabh Kumar)

India Rupee: Sharply up; issue with Refinitiv FX platform fixed for some bks

MUMBAI – The rupee was sharply higher against the dollar, supported by dollar sales by some banks on behalf of foreign portolio investors, dealers said. Overall volumes in the currency market were low as most banks had faced issues with trading for at least a few hours due to a technical glitch in Refinitiv's foreign exchange trading platform, dealers said. 

"There are some flows, which is keeping the rupee higher, but partly it is also because of that FX trading platform issue, which had driven volumes down," a dealer with a state-owned bank said. 

Traders at most banks said they were now able to access the Refinitiv foreign exchange trading platform, while some said the issue persisted for them. A few banks said they made certain technical changes, as advised by Refinitiv, to access the trading platform.

"We shifted on internet from leased line to access FX trading platform," a dealer with another state-owned bank said. "The leased line is still not working, and usually, to trade on internet-based method, a bank needs to obtain some sort of certification and also has to make certain technical changes at their end."

A few dealers said some foreign fund inflows supported the rupee, but with importers purchasing dollars, the rise in the Indian currency was limited. Importers demanded the greenback, noting a relatively lower dollar/rupee levels, dealers said. The Indian unit rose to 86.9950 a dollar earlier in the day.

The dollar index inched slightly higher, which also limited the rise in the rupee, dealers said. The index gained in the European trade, ahead of the release of US producer price index. The dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 103.69 at 1343 IST, against 103.57 on Wednesday and 103.42 on Tuesday. 

For the rest of the day, the rupee is seen moving in a range of 86.90-87.30 against the dollar. Dealers see strong immediate technical resistance for the Indian unit at 86.90 a dollar.  (Sourabh Kumar)

India Rupee: Technical Levels for rupee - Mar 13

MUMBAI – At 1116 IST, the rupee was at 87.0625 per dollar. At 0900 IST, the rupee was at 87.1325 a dollar, against the previous close of 87.2075. 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 as investors assess possibility of tariff war

MUMBAI – Most Asian currencies were mixed in early trade Thursday as market participants assessed the possibility of tariff wars between the US and other countries. After the European Union announced counter tariffs on US goods, US President Donald Trump threatened to impose more tariffs on goods from the EU, if the latter did not roll back its counter measures.

The dollar index, which measures the strength in the greenback against a basket of six major currencies, was 103.52 at 0829 IST against Wednesday's 103.57 and Tuesday's 103.42. Market participants also assessed the release of the US CPI data on Wednesday. It showed that consumer prices in the US increased 0.2% in February, slower than January's 0.5% rise. On a yearly basis, the core CPI increased 3.1%, less than the previous month's 3.3% increase, but more than the expectation of 2.7%.

Market participants would now be waiting for the release of US weekly unemployment report and producer price index for February, both due later in the day.

The Taiwan dollar was higher against the dollar in early trade Thursday as the nation's central bank said Wednesday that inflation may rise above 2% this year. The South Korean won was up 0.1% against the greenback. The currency received support from a rise in its domestic stock market, which was up 0.4% on Thursday. The Philippines peso was steady against the dollar due to little changes in the dollar index. 

The Indonesian rupiah and the Thai baht were up 0.1% each against the greenback. The Malaysian ringgit was steady against the dollar on Thursday. The country's industrial production increased by 2.1% on year in January, lower than the market consensus of a 2.7% rise, which weighed on the ringgit.  (Sourabh Kumar)

India Rupee: Up; Refinitiv glitch lowers volumes, amplifies $/rupee movement

MUMBAI – The rupee was higher against the dollar in early trade Thursday as lower volumes because of a technical glitch in the Refinitiv foreign exchange trading platform exaggerated the dollar/rupee movement, dealers said. Due to the issue with the trading platform, volumes in the market were very low, dealers said. 

"We are not able to do inter-bank deals properly today," a dealer with a state-owned bank said. "Probably that is why you see such a sharp movement in dollar/rupee. We are seeing the inter-bank rates are being quoted with a 4-5 paise difference."

So far in early trade, the rupee has moved in a range of around 21 paise. During opening, dealers at some banks said they were facing issues while logging in to Refinitiv's foreign exchange trading platform. This limited their ability to trade, bringing overall volumes in the market down. The lower volume exaggerated the movement in the dollar/rupee, dealers said. 

While some importers demanded dollars, which limited the rise in the rupee, most trades were hampered by the technical issue with the Refinitiv's foreign exchange trading platform.

The dollar index was little changed, as investors continue to assess the impact of US President Donald Trump's tariff measures and subsequent countermeasures by other countries. The dollar index, which measures the strength in the greenback against a basket of six major currencies, was 103.58 at 0932 IST against 103.57 on Wednesday and 103.42 on Tuesday.

For the rest of the day, the rupee is seen moving in a range of 86.90-87.30 against the dollar. Dealers see strong immediate technical resistance for the Indian unit at 86.90 a dollar.  (Sourabh Kumar)

India Rupee: Expected range for rupee - Mar 13

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 Gowri Lakshmi)

End

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

Edited by Saji George Titus

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