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Informist, Monday, Mar. 17, 2025

By Pratiksha

NEW DELHI – The rupee ended at a three-week high against the dollar as traders persistently sold the greenback to cut their existing long dollar positions, noting sustained weakness in the US unit, dealers said. 

"The dollar has held to its losses, and everybody is taking cues from that," said a dealer at a state-owned bank. "Foreign banks were on offer consistenty today (Monday)." The dollar index has fallen over 3.5% so far this month. 

The rupee ended at 86.8000 a dollar on Monday, appreciating 0.2% from its previous close. The Indian currency moved in a range of 15 paise during the day. 

The Indian unit opened higher against the dollar at 86.9000 a dollar, tracking gains in other Asian currencies, particularly the offshore Chinese yuan. The yuan gained after China on Sunday unveiled a "special action plan" to boost domestic consumption, featuring measures including increasing residents' income and establishing a childcare subsidy scheme. Further, a slew of recent Chinese economic data indicated that the economy was on a firmer footing, aiding the currency.

The rupee gained further to 86.8000 a dollar, shortly after the market opened, as foreign banks, inluding a UK-based bank, stepped in to sell dollars, likely for foreign fund inflows into some Indian corporates, dealers said.  

The Indian currency further recieved a boost and touched the day's high of 86.7550 a dollar, as broad-based weaknesses in the US unit prompted traders to sell the greenback to cut their existing long dollar bets, dealers said. "There is a lot of adjustment going on when it comes to positioning," said a dealer at a foreign bank. "Market dynamics have been a bit tricky, as there has been no one-sided directional movement. For now, everyone is looking at appreciation (in the rupee), but we never know really."

The dollar index has been on a falling spree in the recent times owing to weaker-than-expected economic data in the US, spurring fear of a slowdown in the world's largest economy. On Friday, the dollar index declined after the US consumer sentiment fell to 57.9 in March, the lowest since November 2022, against 64.7 in February. A poll by Reuters had forecast the March print at 63.1.

At 1530 IST, the dollar index, which measures the strength in the dollar against a basket of six major currencies, was at 103.56, compared with 103.74 on Friday and 103.83 on Thursday.

Also aiding the domestic currency was the absence of importers, most of whom refrained from buying dollars around the current dollar/rupee levels, dealers said. "There was regular demand (of dollars) at fixing but not enough to move these (rupee) levels," said a dealer at a private bank. 

Some dealers said importers may have stayed on the sidelines and avoided buying the greenback as they expect the rupee to appreciate further in the coming days, with the dollar index sustaining its losses. Some dealers, however, speculated that public-sector banks may have purchased the greenback on behalf of the Reserve Bank of India to replenish foreign exchange reserves. 

Meanwhile, data released during the last few hours of the trade showed India's merchandise trade deficit fell to a 42-month low in February due to a slump in goods imports while exports continued to lag the year-ago levels. The trade deficit narrowed to $14.05 billion last month, down 28.0% on year. Goods trade deficit was $23.00 billion in January. This also boosted sentiment for the Indian currency, according to dealers.

A rise in domestic equities also provided support to the local unit, dealers said. On Monday, both the benchmark Nifty 50 and the BSE Sensex ended 0.5% higher each.

FORWARDS

The premium on dollar/rupee forward contracts across most tenures ended slightly higher on Monday due to an increase in the net liquidity injected by the central bank, which is a proxy for systemic liquidity conditions, dealers said. The net liquidity injected by the RBI was INR 2.07 trillion on Sunday, against INR 2.22 trillion on Friday, and INR 1.55 trillion on Thursday. 

Meanwhile, volumes in the dollar/rupee forward market were lower than usual on Monday as most market participants refrained from placing large bets ahead of the interest decision by the US Federal Open Market Committee on Wednesday. The Federal Reserve is widely expected to keep interest rates unchanged at its two-day meeting starting Tuesday.

At 1530 IST, on an annualised basis, the one-year exact-period dollar/rupee forward premium was 2.16%, against 2.14% on Thursday. On an absolute basis, the premium was 187.71 paise, compared to 186.01 paise on Thursday.

OUTLOOK

On Tuesday, the rupee will take cues from movement in the dollar index, dealers said. The rupee will also track the movement in other Asian currencies in early trade Tuesday, dealers said. 

Market participants await the release of the US retail sales data due later on Monday, for more insight into the health of the world's largest economy. Further, some traders may avoid placing large bets ahead of the US FOMC outcome on Wednesday, dealers said. 

According to dealers, traders may continue cutting their long dollar positions if the dollar declines further in the coming days, thus, aiding the Indian unit. During the day, the rupee is seen moving in a range of 86.70-87.10 against the dollar. Dealers see immediate technical resistance for the Indian unit at 86.70 a dollar.

India Rupee - World FX: Dollar remains weak; FOMC, BoJ policy in focus

MUMBAI – The dollar remained broadly weak against other major currencies on Monday owing to weaker-than-expected economic data in the US. The index declined on Friday after the US consumer sentiment plunged to 57.9 in March, the lowest since November 2022. In February, the figure was 64.7. A poll by Reuters had forecast it to be at 63.1. Amid the fear of a wide-scale tariff war, one year ahead inflation expectations of US consumers increased to 4.9%.

At 1521 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was 103.61, compared to the previous close of 103.74 on Friday and 103.83 on Thursday. The index has fallen over 3.5% so far this month. 

Market participants await the decision of the US Federal Open Market Committee beginning Tuesday. Traders have priced in a 99.0% probability of the US Fed maintaining the status quo, according to the CME FedWatch tool. 

The Japanese yen was broadly steady against the US unit as market participants keenly await the monetary policy decision by the Bank of Japan on Wednesday, where it is widely expected to hold rates steady. Over two-thirds of economists polled by Reuters expect the Bank of Japan to hike rates by 25 basis points most likely in July. 

The euro traded flat against the dollar on Monday. On Friday, Germany's next Chancellor Friedrich Merz announced that he had secured the crucial backing of the Green party for a massive increase in state borrowing. After winning elections last month, Merz had proposed a 500 billion euro ($544 billion) fund for infrastructure and defence to spur growth in the bloc's largest economy. A vote on the proposals is scheduled for Tuesday.

The Canadian dollar traded flat against the greenback on Monday while the Swiss franc was up 0.2% owing to safe-haven inflows amid weak risk sentiments amongst investors. The pound sterling was up 0.1%. 

The Australian dollar and the New Zealand dollar were up 0.3% and 0.4% against the US dollar, respectively, tracking gains in the offshore Chinese yuan. China's currency gained after the Chinese authorities announced that it would take steps to revive consumption by boosting incomes. The plan also includes measures to stabilise the stock and real estate market and raise the country's birth rate. Any change in the Chinese economy directly impacts the currencies of Australia and New Zealand due to their close bilateral trade relations.  (Gowri Lakshmi)

India Rupee: Remains sharply higher as traders trim long dollar positions

MUMBAI – The rupee remained sharply higher against the dollar on Monday as broad-based weakness in the US unit prompted traders to sell the greenback to cut their existing long dollar bets, dealers said. "Banks are panic selling (dollars) today (Monday), they are cutting long (dollar) positions," a dealer at a private bank said. "We expect the rupee to rise as high as 86.65 a dollar in the week."

Dealers said foreign and state-owned banks sold dollars on behalf of Indian corporates, who looked to cut their existing bets in favour of the dollar. The dollar index has been on a falling spree in the recent times owing to weaker-than-expected economic data in the US and has fallen over 3.5% so far this month. 

At 1400 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 103.70, compared to the close of 103.74 on Friday and 103.83 on Thursday.

Further, lack of adequate dollar demand from importers around the current dollar/rupee levels also aided the rupee, they said. The rupee rose to a high of 86.7550 a dollar during the day. "Importers are not active anymore, most have booked profits when levels were good in the past weeks. Now the demand will begin by mid-week when it is time for month-end payments," a currency trader at a state-owned bank said. However, a few dealers speculated that some public-sector banks may have purchased the greenback on behalf of the Reserve Bank of India to replenish foreign exchange reserves. 

Market participants now await monetary policy decision by the US Federal Open Market Committee on Wednesday. Traders have priced in a 99.0% probability of the US Fed maintaining status quo at the meeting, according to the CME FedWatch tool.

For the rest of the day, the rupee is seen moving in a range of 86.65-87.10 against the dollar. Dealers see strong immediate technical resistance for the Indian unit at 86.70 a dollar.  (Gowri Lakshmi)

India Rupee: Technical Levels for rupee - Mar 17

MUMBAI – At 1124 IST, the rupee was at 86.8175 per dollar. At 0900 IST, the rupee was at 86.9000 a dollar, against the previous close of 86.9975. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Sourabh Kumar and Pratiksha)

India Rupee: Sharply up as bks sell dlrs for FX inflows, offshore yuan rises

MUMBAI – The rupee was sharply up against the dollar on Monday as banks sold the greenback for foreign fund inflows, likely into some Indian corporates, dealers said. A rise in the offshore Chinese yuan in early trade also supported the rupee, they said.

"Right now, it is only selling (of dollars), even importers aren't active much, which is why the levels are high," said a dealer from a state-owned bank. The rupee rose to a high of 86.8000 a dollar shortly after the domestic spot market opened. 

The rupee got some support from a rise in the offshore Chinese yuan in early trade as investors assessed the Chinese government's recent stimulus plans, dealers said. The Chinese yuan gained as Chinese authorities on Sunday announced they would take steps to revive consumption by boosting incomes, including measures to stabilise the stock and real estate markets, and raise the country's birth rate. Investors also assessed data released by China early on Monday, which showed retail sales in the world's second-largest economy rose 4.0% on year in Jan-Feb.

A broadly weak dollar index also supported the Indian unit, dealers said. The index fell on Friday after an index reading of US consumer sentiment plunged to 57.9 in March, the lowest since November 2022. In February, the figure was 64.7. A poll by Reuters had forecast the print at 63.1. "The dollar will likely remain on the weaker side for another two-three days definitely. Fed (US Federal Reserve) is likely to hold rates, rest is dependent on the policy guidelines," the dealer at the state-owned bank said. 

At 0950 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 103.70, compared to the close of 103.74 on Friday and 103.83 on Thursday. Market participants now await monetary policy decision by the US Federal Open Market Committee on Wednesday. Traders have priced in a 99.0% probability of the US Fed maintaining status quo at the meeting, according to the CME FedWatch tool.

The rupee also strengthened tracking a rise in the domestic stock market, according to some dealers. At 0950 IST, the benchmark Nifty 50 and the BSE Sensex were up 0.7% and 0.6%, respectively.

During the day, the rupee is seen moving in a range of 86.75-87.10 against the dollar. Dealers see strong immediate technical resistance for the Indian unit at 86.75 a dollar.  (Gowri Lakshmi)

India Rupee - Asia FX:Mixed; mkt assesses China data, econ stimulus measures

MUMBAI – Asian currencies were mixed against the dollar in early trade Monday, as investors assessed latest economic stimulus announcements by China on Sunday, as well as a set of data released on Monday. A broadly weak dollar index supported Asian currencies.

Data released early on Monday showed retail sales in the world's second-largest economy rose 4.0% on year in Jan-Feb. Data also showed that the unemployment rate in February increased to 5.4% from 5.2% the previous month.

China on Sunday announced a new set of measures to boost consumption in its sluggish economy. In addition to raising the country's birth rate, the government stated that it would take steps to boost incomes, including plans to stabilise the stock and real estate markets.

The dollar index was broadly down due to rising concerns about US President Donald Trump's tariff policies on the country's economy. The index, which measures the strength in the greenback against a basket of six major currencies, was at 103.71 at 0833 IST, against 103.74 on Friday and 103.83 on Thursday.

In the US, an index measuring consumer sentiment fell to 57.9 in March, the lowest since November 2022. In February, the index was at 64.7. A poll by Reuters had forecast the reading at 63.1. Amid fear of a wide-scale tariff war, the one-year ahead inflation expectation of US consumers increased to 4.9%.   

Another set of data relased on Thursday showed unemployment benefits claimed by Americans in the week ended Mar. 8 were less than what economists in a Reuters poll had expected. Initial claims for state unemployment benefits fell 2,000 in the week ended Mar. 8 to 220,000, lower than the expectation of 225,000.

Market participants now await the interst rate decisions of the US Federal Reserve and Bank of Japan, both due Wednesday. Both Bank of Japan and the US Federal Reserve are expected to keep their respective benchmark rates steady.

The South Korean won was up 0.4% against the US dollar, tracking gains in its stock market. The Korea Composite Stock Price Index was up 1.5% in early trade. The Taiwan dollar was up 0.1% against the greenback. 

The Philippines peso was 0.1% higher against the greenback. The Indonesian rupiah was steady, while the Malaysian ringgit was 0.1% lower against the US dollar. The Thai baht also fell 0.1% against the US currency.  (Sourabh Kumar)

India Rupee: Expected range for rupee - Mar 17

MUMBAI – Following are the expected support and resistance levels for the rupee on Monday, as forecast by leading banks and brokerages in an Informist poll:

(Sourabh Kumar, Pratiksha, and Gowri Lakshmi)

End

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

Edited by Akul Nishant Akhoury

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