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Informist, Tuesday, Mar. 18, 2025

By Pratiksha

NEW DELHI – The rupee rose sharply, settling at a near seven-week high, against the dollar on Tuesday, primarily as banks persistently sold dollars for foreign fund inflows and exporters, dealers said. The Indian currency was also helped by weakness in the dollar index and a surge in domestic equities, they said.  

"Everything is in favour of the rupee right now. Traditionally, March is a good month for rupee and that is exactly what is happening. We are seeing lots of inflows," said a dealer at a big state-owned bank.

After appreciating 0.3% against the dollar from its previous close, the Indian unit came out as the best performing currency among its emerging market peers Tuesday. It settled at 86.5700 a dollar, against 86.8000 on Monday, appreciating for the third consecutive trading day. Other Asian currencies moved on a mixed note, with the South Korean won falling 0.4% against the greenback.

The rupee started the day on a positive note, opening slightly higher at 86.7625 a dollar, tracking broad-based weakness in the dollar index, dealers said. The dollar index, which measures the strength in the dollar against a basket of six major currencies, fell on Monday after a weaker-than-expected US retail sales data for February.  

Retail sales rose 0.2% last month after a downwardly revised 1.2% decline in January. Economists polled by Reuters had, however, forecast retail sales advancing 0.6% after a previously reported 0.9% drop in January.

The data added to the slew of recent weak economic data in the US and reinforced the growing uncertainty over the health of the world's largest economy. Concerns about US President Donald Trump's unpredictable trade policies have also dampened investors' outlook on the US, and weighed on the US unit. Noting the sustained weakness in the dollar index, traders sold the greenback to cut their existing long dollar positions, which also supported the Indian currency, dealers said.

Further, banks sold dollars for foreign fund inflows into some Indian corporates, which boosted the domestic unit, according to dealers. Some of the foreign fund inflows were also likely on account of the FTSE index rejig for March, which comes into effect on Friday, they said. 

"Inflows have caused this correction (in the rupee). There are coporate inflows...we have also been seeing some inflows into debt of late," said a dealer at a private bank. "Anyways, exporter activity is there, so that is also supporting." The Indian currency has appreciated almost 1.1% against the dollar so far this month.

The domestic currency also found support in banks' dollar sales on behalf of exporters, who who looked to convert their foreign exchange-denominated earnings into rupees before closing their books for the financial year ending March, according to dealers. 

The dollar index fell further during European trade, hovering around a five-month low, tracking gains in the euro. Following this, the Indian unit ascended to the day's high of 86.5325 a dollar. 

At 1530 IST, the dollar index, which measures the strength in the dollar against a basket of six major currencies, was at 103.27, compared with 103.41 on Monday and 103.74 on Friday. The index fell to a low of 103.23 during the day.

Further, a surge in domestic equities also provided support to the local unit, as per dealers. On Tuesday, both the benchmark Nifty 50 and the BSE Sensex ended 1.5% higher each.

Additionally, the Indian unit recieved a boost from the lack of adequate dollar purchases on behalf of importers around the current dollar/rupee levels, dealers said. While some importers stepped in to buy dollars noting the relatively lower dollar/rupee levels, most remained on the sidelines as they expect the rupee to appreciate further in the coming days, they said. 

"Some oil importers are there around these levels, but not a lot. It looks like 86.50 (a dollar) will happen soon," said a dealer at a state-owned bank. "I expect RBI to buy (dollars) around 86.50, but we'll have to wait and see if that happens."

FORWARDS

The premium on dollar/rupee forward contracts ended lower across most tenures on Tuesday as exporters sold dollars for forward delivery to meet their financial year-end payment requirements, dealers said.

Volumes in the dollar/rupee forward market were subdued as most market participants refrained from placing large bets ahead of the interest rate decision of the US Federal Open Market Committee late Wednesday. The FOMC is widely expected to keep interest rates unchanged. 

"Forwards should remain rangebound this week. We are seeing some recieving in the far tenures. I think a further direction is dependent on the swap auction result," said a dealer at another state-owned bank. The RBI will hold a $10 billion dollar/rupee buy/sell swap auction for a period of 36 month on Monday. 

At 1530 IST, the exact-period one-year dollar/rupee forward premium was 183.56 paise, against 187.71 paise on Monday. On an annualised basis, the forward premium was 2.12% against Monday's 2.16%.

OUTLOOK

On Wednesday, the rupee will take cues from movement in the dollar index and other Asian currencies, particularly the Chinese yuan, dealers said. "If it (rupee) breaks 86.50, we may see some demand (for dollars) coming in from importers," said a dealer at a brokerage firm. "I don't think 86.50 will hold for too long."

Most market participants may stay on the sidelines and avoid placing large bets ahead of the US FOMC outcome on Wednesday, dealers said. They will also watch out for the new economic projections from Fed officials for cues on the health of the world's largest economy. 

During the day, the rupee is seen moving in a range of 86.40-86.90 against the dollar. Dealers see immediate technical resistance for the Indian unit at 86.50 a dollar.

India Rupee - World FX:Dlr index near 5-mo low on weak econ data; euro rises

MUMBAI – The dollar index hovered around a five-month low in European trade after data released on Monday showed weaker-than-expected US retail sales in February. US retail sales rose 0.2% on month in February, lower than the forecast of a 0.6% rise, according to a poll by Dow Jones, and only slightly better than the revised 1.2% decline in January. String of weaker-than-expected economic data in recent times has already led to concerns about a slowdown in the world's largest economy.

A rise in the euro against the dollar also weighed on the dollar index. The euro rose 0.3% against the US unit ahead of a vote in Germany's lower house of parliament on a fiscal borrowing reform, which could boost the bloc's largest economy and revive growth across Europe. Traders will closely assess the bloc's balance of trade data and Germany's economic sentiment index due later in the day. 

At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 103.27, compared to 103.41 on Monday and 103.74 on Friday. The index fell to a low of 103.23 during the day. Market participants are now waiting for the outcome of the US Federal Open Market Committee meeting that will be announced Wednesday. The US central bank is widely expected to hold rates steady at this meeting.

The Japanese yen was down 0.3% against the greenback. The Bank of Japan's monetary policy meeting outcome is also due on Wednesday. The central bank is seen holding rates steady due to growing concerns over global economic prospects. The Bank of Japan is likely to raise interest rates in its July meeting, according to a Reuters poll.

The pound sterling traded flat against the US dollar. Data released on Monday showed that UK's manufacturing output forecast fell in the quarter ending March as fears of a global trade persists.

The Canadian dollar was up 0.1% against the greenback ahead of inflation data for February due later in the day. The Swiss franc was up 0.1% against the US dollar. On Tuesday, the Swiss National Bank said it had bought foreign currency worth $1.36 billion last year, significantly reducing its interventions after bringing inflation under control. The Swiss National Bank's monetary policy outcome is due Thursday.

The Australian dollar was flat against the greenback. Earlier in the day, Reserve Bank of Australia's Assistant Governor Sarah Hunter said the central bank remains more cautious than the market about further policy easing after it cut interest rate for the first time in over four years last month. "As the Governor and Deputy Governor have both indicated recently, the February decision reflected a judgement by the board that it was the right time to take some restrictiveness away, but the board were more cautious than the market about prospects for further easing," Hunter said.

The New Zealand dollar was up 0.1% against the US unit after People's Bank of China announced plans to ramp up consumption and boost the economy. On Monday, the People's Bank of China vowed to implement a moderately loose monetary policy to spur domestic consumption. Any change in the Chinese economy directly impacts the New Zealand currency due to close bilateral trade relations of the two countries.  (Gowri Lakshmi)

India Rupee:Premiums dn as exporters sell fwd dollars for fincl yr-end needs

MUMBAI – The premium on most dollar/rupee forward contracts fell on Tuesday as exporters sold dollars for forward delivery to meet their needs for the greenback towards the end of the financial year, dealers said.

"There is some receiving, probably for year-end, but the overall volume has remained very low," a dealer with a state-owned bank said. Volumes in the dollar/rupee forward market were low Tuesday, as most market participants refrained from placing large bets ahead of the interest rate decision of the US Federal Open Market Committee early Thursday. The FOMC is widely expected to keep Fed funds rate steady. Market participants also kept an eye on the outcome of Bank of Japan's rate decision. It is also expected to leave the benchmark rate unchanged. 

A few dealers speculated that the RBI might also have sold dollars for forward delivery, which pushed premiums lower. However, there seems to be less likelihood of this, some other dealers said. In recent weeks, the central bank has been selling forward dollars to offset the impact of its spot dollar sales on rupee liquidity. Spot sales of dollars to support Indian currency drain the rupee out of the system.

The RBI will hold a $10-billion dollar/rupee buy/sell swap auction for a period of 36 month on Monday. Forward premiums may inch lower before the swap auction, dealer said.

With the rupee rising in the spot market, the aggressiveness in booking forward contracts among importers has eased, at least in the last one week, as per market participants. It also released some upward pressure on forward premiums, dealers said. 

However, a widening rupee liquidity deficit limited the fall in premiums, dealers said. The net liquidity injected by the Reserve Bank of India, which is a proxy for systemic liquidity conditions, increased to INR 2.43 trillion on Monday, the highest since Jan. 29.

The exact-period one-year dollar/rupee forward premium was 183.06 paise at 1421 IST, down from 187.71 paise on Monday. On an annualised basis, the forward premium was 2.11%, down from Monday's 2.16%.  (Sourabh Kumar)

India Rupee: Rises sharply as banks sell dollars for FX inflows, exporters

MUMBAI – The rupee rose sharply against the dollar on Tuesday as banks sold dollars for foreign fund inflows into some Indian corporates, dealers said. The Indian currency also got a boost as some banks sold the greenback on behalf of exporters to meet their financial year-end payment requirements, they said.

"It's all selling (of dollars) now. Traders, corporates, exporters, all of them are selling, which is why the uptick in rupee," a currency trader at a brokerage firm said. "We can see 86.50 (a dollar) getting strong resistance now."

Further, traders also continued to trim their long dollar positions owing to sustained weakness in the dollar index, which supported the rupee, they said. The Indian unit rose to a high of 86.5950 a dollar so far during the day. 

However, gains in the Indian unit were capped as importers rushed to purchase dollars, noting the relatively lower dollar/rupee levels, dealers said. Some oil marketing companies and other importers also purchased dollars to meet their month-end payment obligations, they said.

"Current levels are great and attractive levels for importers. I think 86.60 (a dollar) should hold for some time. Though difficult, the rupee may even rise to 86.50 upon when banks may step in to purchase (dollars) on behalf of RBI (Reserve Bank of India) to shore the reserves," a currency trader at the brokerage firm said. 

Market participants now keenly await monetary policy decisions by the Bank of Japan and the US Federal Open Market Committee due on Wednesday. Both central banks are widely expected to hold rates. "A dovish stance is what is expected from the Fed. There is no reason for them to go hawkish except for the tariff uncertainties and inflation, but dovish stance is what is more likely and the dollar index will continue to remain weak," a dealer at a public-sector bank said. 

At 1252 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 103.48, compared to 103.41 on Monday and 103.74 on Friday.  

For the rest of the day, the rupee is seen moving in a range of 86.50-86.90 against the dollar. Dealers see immediate technical resistance for the Indian unit at 86.50 a dollar.  (Gowri Lakshmi)

India Rupee: Technical Levels for rupee - Mar 18

MUMBAI – At 1030 IST, the rupee was at 86.7175 per dollar. At 0900 IST, the rupee was at 86.7625 a dollar, against the previous close of 86.8000. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Gowri Lakshmi, Sourabh Kumar, and Pratiksha)

India Rupee: Up as traders trim long dlr bets, importers' dlr buys cap gains

MUMBAI – The rupee rose against the US dollar on Tuesday as traders continued to trim their long dollar positions noting broad-based weakness in the US unit, dealers said. However, some banks stepped in to purchase dollars on behalf of importers, which limited gains in the Indian unit. The rupee rose to a high of 86.7100 a dollar in early trade. 

"Short selling (of dollars) due to weak dollar is what is happening today (Tuesday) as well. Weakness in dollar is expected to continue but important events are lined up this week after that a clearer picture can be seen," a dealer at a state-owned bank said. "The Fed (US Federal Reserve) will likely go dovish." 

Market participants keenly await monetary policy decisions by the Bank of Japan and the US Federal Open Market Committee at their meetings beginning later in the day. Both central banks are widely expected to hold rates. The Bank of England is expected to announce its policy decision on Thursday, and is also expected to maintain status quo. 

The rupee also got a boost from gains in the domestic stock market, according to some dealers. At 1000 IST, the benchmark Nifty 50 and the BSE Sensex were up 1% each. 

The dollar index rose marginally in early trade but remained broadly weak on Tuesday. The index gained after data on Monday showed US retail sales in February rose 0.2% on month, below the forecast of 0.6% rise in a Dow Jones poll, but better than the downwardly revised decline of 1.2% in January. At 1000 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 103.56 compared to 103.41 on Monday and 103.74 on Friday.

However, gains in the Indian unit were capped after banks purchased the greenback on behalf of importers, who wanted to meet their month-end payment obligations, dealers said. "We are mostly seeing only selling (of dollars) with limited demand from importers. The rupee may even hit stop-losses (around 86.65) and may rise as high as 86.50," the dealer at the public sector bank said. 

During the day, the rupee is seen moving in a range of 86.60-86.90 against the dollar. Dealers see strong immediate technical resistance for the Indian unit at 86.65 a dollar.  (Gowri Lakshmi)

India Rupee - Asia FX: Mixed as traders assess US econ data; yuan down 0.1%

MUMBAI – Asian currencies traded on a mixed note on Tuesday, as market participants continued to assess recent economic data in the US to gauge the health of the world's largest economy. On Monday, US retail sales data for February showed only a modest rebound in February. However, underlying readings indicated that sales still grew at a solid pace amid an economic slowdown and rising inflation. 

US retail sales in February rose 0.2% on month, below the forecast of a 0.6% rise, according to a poll by Dow Jones. However, on month, the reading was better than the downwardly revised decline of 1.2% in January, while core retail sales rose 1.0%. The data comes after a string of recent weaker-than-expected economic prints in the US led to concern about a slowdown in the world's largest economy. 

At 0954 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 103.55 compared to 103.41 on Monday and 103.74 on Friday. Market participants now await the monetary policy outcome and future interest rate guidance by the US Federal Open Market Committee, due early Thursday. The US central bank is widely expected to keep rates steady at the meeting. 

The Malaysian ringgit was down 0.1% against the greenback. However, losses in the currency were capped due to gains in the domestic stock market. At 0954 IST, the benchmark index, the Kuala Lampur Composite Index, was up 1.0%. 

The Thai baht was up 0.1%, while the Philippines peso traded flat against the US dollar. The Chinese yuan was down 0.1% despite attempts by Chinese authorities to ramp up consumption and boost the economy. On Monday, the People's Bank of China vowed to implement a moderately loose monetary policy to spur domestic consumption. 

Data on Monday showed China's retail sales picked up in Jan-Feb, but unemployment rose and factory output slipped. The retail sales rose 4.0% in Jan-Feb, compared to a 3.7% rise in December. The reading was in line with forecasts by analysts in a Reuters poll. The urban survey-based unemployment rate in February rose to 5.4%, the highest in two years. China's industrial output, meanwhile, rose 5.9% on year in the first two months, but slowed from the 6.2% expansion in December. 

The Indoniesian rupiah was flat against the greenback. Traders await Bank Indonesia's monetary policy decision on Wednesday, where it is widely expected to hold rates steady to safeguard the Indonesian currency from further depreciation amid rising global uncertainties. On Monday, data showed Indonesia's trade surplus was larger than expected in February at $3.12 billion, stronger than the forecast of $2.45 billion by analysts in a Reuters poll. 

The South Korean won was down 0.4%, though losses were limited by gains in the domestic stock market. At 0954, the benchmark index KOSPI was up 0.1%. The Taiwan dollar was up 0.1%.  (Gowri Lakshmi)

India Rupee: Expected range for rupee - Mar 18

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

(Sourabh Kumar and Pratiksha)

End

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

Edited by Akul Nishant Akhoury

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