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Informist, Wednesday, Mar. 19, 2025

By Sourabh Kumar

MUMBAI – The rupee ended at an over seven-week high against the dollar on Wednesday on foreign fund inflows and as traders trimmed their long dollar positions, dealers said. The rupee settled higher for the sixth consecutive trading day.

"There were good flows today too, and coupled with long dollar cutting, it has proved good for the rupee," a dealer with a state-owned bank said. "I am surprised importers did not rush to buy at this level."

After moving in a range of about 26 paise and touching an over seven-week high of 86.4175 a dollar, the rupee settled at 86.4425 a dollar on Wednesday. On Tuesday, the Indian currency had closed at 86.5700 a dollar.

The rupee had opened slightly lower at 86.6350 a dollar. Some dollar demand from importers pushed it to the day's low of 86.6700 a dollar, but most waited for the rupee to rise further to place large bets, dealers said.

Later, some foreign banks, including a US-based bank, sold dollars, which lifted the rupee higher, dealers said. Moreover, some banks cut their long dollar positions, dealers said. A rise in domestic stock indices also supported the rupee, dealers said. The Nifty 50 and BSE Sensex closed 0.3% and 0.2% higher, respectively, on Wednesday.

Some exporters also sold dollars, which gave the rupee a lift, dealers said. Exporters sold the greenback to meet their payment obligations at the end of the financial year, dealers said.

Fall in crude oil prices also aided the Indian currency, dealers said. At 1530 IST, the May Brent crude contract on the Intercontinental Exchange was at $70.21 per barrel, against $70.56 per barrel on Tuesday and $71.07 per barrel on Monday. Oil prices edged lower after Russian President Vladimir Putin agreed to halt attacks on Ukraine's energy infrastructure for 30 days after a phone call with US President Donald Trump. This has increased hopes of an end to the Russia-Ukraine war.

However, a recovery in the dollar index from an over five-month low hit Tuesday capped the rise of the rupee, dealers said. The dollar index, which measures the strength of the greenback against a basket of six major currencies, was 103.64 at 1530 IST against 103.24 on Tuesday and 103.41 on Monday. The dollar was up due to a fall in the Japanese yen, after Bank of Japan kept its benchmark rates steady earlier in the day. The yen carries a weightage of 13.6% in the dollar index.

Overall volume in the market was lower than usual, as most market participants refrained from placing large bets ahead of the US Federal Open Market Committee meeting decision later in the day. The FOMC is expected to keep the federal funds rate unchanged. After Fed's decision, market participants will turn their attention to the rate decision of Bank of England on Thursday. It is expected to keep the rates unchanged.

FORWARDS

Premium on dollar/rupee forward contracts ended slightly higher on Wednesday as some banks purchased forward dollars at relatively lower levels, dealers said. Volumes were lower than usual as market participants refrained from placing large bets ahead of the outcome of the US Federal Open Market Committee.

A fall in the benchmark 10-year US Treasury yield also pushed dollar/rupee forward premiums higher, dealers said. Forwards of a currency pair are reflective of the interest rate differential between two countries.

Forward premiums are expected to inch lower in the next few days, before the RBI's swap auction on Monday, dealers said. The RBI will conduct a $10-billion dollar/rupee buy/sell swap auction for a tenor of 36 months on Monday.

At 1530 IST, the exact-period one-year dollar/rupee forward premium was 185.50 paise, against 183.56 paise on Tuesday. On an annualised basis, the forward premium was 2.13% against Tuesday's 2.12%.

OUTLOOK

On Thursday, the rupee will take cues from the movement of the dollar index after FOMC's rate decision. Though the Fed is expected to keep the benchmark rate unchanged, market participants will look for comments on future rate trajectory and inflation expectations in the coming months.

"While there is some recovery in the dollar index, I think the broad based weakness will continue, and that is a positive for the rupee," a dealer with a private bank said. The rupee will also track other Asian currencies, particularly the Chinese yuan, dealers said.

During the day, the rupee is seen moving in a range of 86.30-86.90 against the dollar. Dealers see immediate technical resistance for the Indian unit at 86.40 a dollar.

India Rupee - World FX: Yen down post BoJ Ueda remarks after leaving rates unchanged

MUMBAI – The Japanese yen was down down 0.3% against the greenback following the remarks made by Bank of Japan Governor Kazuo Ueda's about hightened global tariff fears. "We will scrutinise how US trade policy unfolds, how it affects the US and other global economies, and how that all impacts Japan's economic and price outlook," Ueda said at the post policy press conference. 

The Bank of Japan held its short-term policy rate rates steady at 0.5% unanimously on Wednesday as policymakers needed more time and cues to gauge the impact of higher US tariffs on the Japanese economy. "Concerning risks to the outlook, there remain high uncertainties surrounding Japan's economy and prices including the evolving situation regarding trade and other policies in each jurisdiction," the central bank said in a statement. 

The euro was down 0.4% against the greenback on Wednesday ahead of the US Federal Open Market Committee meeting concluding later in the evening. On Tuesday, German's investor morale jumped higher-than-expected. The ZEW economic sentiment index stood at 51.6 in March from 26.0 a month earlier. Analysts had forecast a reading of 50.3 in a Reuters poll.

Further, tensions in Europe eased after Kremlin announced that Russian President Vladimir Putin agreed to a halt in targetting Ukranian engery targets for the next 30 days after talks with Washington.

The dollar index recovered modestly from an over five-month low it hit on Tuesday, due to weakness in euro and Japanese yen. Data on Tuesday showed that US manufacturing production picked up pace in February, boosted by a surge in motor vehicle output. Factory output in February jumped 0.9% after an upwardly revised 0.1% gain the month prior, the Federal Reserve said. Economists forecast a rebound of 0.3% after a previously reported 0.1% drop in a Reuters poll.

At 1516 IST, the dollar which measures the strength of the dollar against a basket of six major currencies, was at 103.57, compared with 103.24 on Tuesday and 103.41 on Monday. 

The pound sterling was down 0.2% against the dollar. Market participants await monetary policy decision by the Bank of England due Thursday where the central bank is widely expected to keep rates unchanged. 

The Canadian dollar was up 0.2% after data on Tuesday showed the country's annual inflation sharply rose to 2.6% in February from 1.9% in January. On month, inflation jumped 1.1% while core inflation inched to 2.9% last month. 

The New Zealand dollar was down 0.6% against the greenback on Wednesday after New Zealand's consumer confidence declined in Jan-Mar amid rising fears of  potential trade war. The Westpac-McDermott Miller consumer confidence index fell to 89.2 from 97.5 in the quarter ended December. A reading below 100 indicates more pessimists than optimists.

Tracking weakness in the New Zealand unit, the Australian dollar was down 0.2% against the greenback. Any change in the New Zealand economy directly impacts the Australian currency due to their close bilateral trade relations. The Swiss franc was up 0.1% against the greenback on safe-haven inflows. The Swiss National Bank is set to announce its policy decision on Thursday, where the central bank is largely anticipated to cut rates by 25 basis points.  (Gowri Lakshmi)

India Rupee: Premiums tad up as banks buy forward dollars at lower levels

MUMBAI – Premium on dollar/rupee forward contracts were slightly higher on Wednesday as some banks purchased forward dollars at relatively lower levels, dealers said. Volumes were lower than usual as market participants refrained from placing large bets ahead of the outcome of the US Federal Open Market Committee, which is expected to keep federal funds rate unchanged.

"It has barely moved today, but some upward movement that you see is the result of paying at lower levels," a dealer with a state-owned bank said. The one-year dollar/rupee forward premium had hit a near two-week low of 2.10% earlier in the day, which provided some market participants opportunity to purchase forward dollars at relatively lower levels, dealers said.

A fall in the benchmark 10-year US Treasury yield also pushed dollar/rupee forward premiums higher, dealers said. Forwards of a currency pair are reflective of the interest rate differential between two countries.

The persistent liquidity deficit in the banking system also pushed premiums higher, dealers said. The net liquidity injected by the Reserve Bank of India, which is a proxy for systemic liquidity conditions, was INR 2.26 trillion on Tuesday against INR 2.43 trillion on Monday.

Forward premiums are expected to inch slightly down in the next few days, before the RBI's swap auction on Monday, dealers said. The RBI will conduct a $10-billion dollar/rupee buy/sell swap auction for a tenor of 36 months on Monday.

The exact-period one-year dollar/rupee forward premium was 185.96 paise at 1407 IST against 183.56 paise on Tuesday. On an annualised basis, the forward premium was 2.14% against Tuesday's 2.12%.  (Sourabh Kumar)

India Rupee: Erases all losses on banks' dollar sales for FX inflows

MUMBAI – The rupee erased all losses from early trade and rose against the dollar Wednesday as banks sold dollars for some foreign fund inflows, dealers said. Traders continued to trim their long dollar positions, which further supported the rupee, they said. Volumes in the currency market remained subdued as traders refrained from placing large bets ahead of the outcome of the US Federal Open Market Committee's meeting later in the day, they said. 

"Banks are on the selling side today as well. Most foreign banks cutting their (long dollar) positions and are waiting for FOMC and BoE (Bank of England)," a currency dealer at a brokerage firm said. Traders have been trimming their long dollar positions this week, supporting the Indian unit. 

Market participants await the policy decision and guidelines on interest rate trajectory by the US FOMC later in the evening. It is widely anticipated that the central bank will hold rates steady amid rising global economic concerns and potential tariff wars. The Bank of England will detail its rate decision on Thursday.

Some exporters also sold the greenback, which gave a boost to the rupee, dealers said. Exporters sold the greenback to meet their financial year-end payment obligations, dealers said. The rupee touched 86.4675 a dollar during the day, the highest since Feb. 12.

Earlier in the day, the rupee was weighed down by banks' dollar purchases for importers, who wanted to take advantage of the relatively lower dollar/rupee levels, dealers said. 

The dollar index fell to an over five-month low on Tuesday and recovered on Wednesday, though it remained largely weak. The dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 103.48 at 1226 IST, against 103.24 on Tuesday and 103.41 on Monday.

For the rest of 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 86.40 a dollar.  (Gowri Lakshmi)

India Rupee: Technical Levels for rupee - Mar 19

MUMBAI – At 1046 IST, the rupee was at 86.5100 per dollar. At 0900 IST, the rupee was at 86.6350 a dollar, against the previous close of 86.5700. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Sourabh Kumar and Pratiksha)

India Rupee - Asia FX: Mixed as multiple central bk policy outcomes eyed Wed

MUMBAI – Asian currencies traded on a mixed note on Wednesday as market participants await the outcome of multiple central banks' monetary policy meetings later in the day. While the Bank of Japan earlier in the day decided to hold rates steady, the monetary policy outcomes of the Bank Indonesia, and the US Federal Reserve are due later in the day. Both the central banks are widely expected to maintain status quo on their benchmark lending rates. 

The Indonesian rupiah was down 0.5% against the US dollar. Bank Indonesia is expected to hold interest rates steady at 5.75% for the second consecutive meeting to support the weakening Indonesian currency. Bank Indonesia may also opt for keeping rates steady for stability after the nation's veteran finance minister Mulyani Indrawati was forced to deny resignation rumors that had sent stocks tumbling, reports said. 

The Chinese yuan and Taiwan dollar were down 0.1% each against the US unit. The Philippine peso was up 0.1%. However, gains in the currency were capped after the central bank in a report said the Philippine economy might grow slower than expected this year and next year due to rising global commodity prices and weak economic activity. 

The South Korean won was down 0.1% against the greenback after minutes of the central bank's February monetary policy meeting on Tuesday showed the board members assessed that the economy was weakening faster than expected due to sluggish domestic spending and uncertainties from US tariff policies. "It's time to prioritise policies to restore economic sentiment, which has been very weak," one of the board members said. 

The Thai baht was down 0.1% against the greenback after minutes of the Bank of Thailand's February monetary policy meeting showed the members see growth lower than previously expected amid rising global tensions. The minutes released Wednesday also showed that the Thai economy is seen growing slightly higher than 2.5% this year.

The dollar index hit an over five-month low on Tuesday and hovered around the same level in early trade Wednesday. On Tuesday, data showed that US manufacturing production picked up pace in February, boosted by a surge in motor vehicle output. Factory output in February jumped 0.9% after an upwardly revised 0.1% gain the month prior, the Federal Reserve said. Economists forecasted a rebound of 0.3% after a previously reported 0.1% drop in a Reuters poll. However, expectations of weakness in the US economy due to potential trade war weighed on the dollar index.

At 0851 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 103.29, compared to 103.24 on Tuesday and 103.41 on Monday. The Malaysian ringgit was up 0.4% tracking weakness in the US unit. (Gowri Lakshmi)

India Rupee: Tad down as importers buy dlrs; volume low before FOMC decision

MUMBAI – The rupee was a tad lower against the dollar in early trade on Wednesday, with volumes lower than usual as most market participants refrained from placing large bets ahead of the US Federal Open Market Committee's decision on interest rates, due later in the day, dealers said. Some banks purchased the greenback on behalf of importers as well as foreign portfolio investors, which weighed on the rupee.

"There is no as such reason for a gap-up opening, it is just that the flows that were present on Monday is no longer there," a dealer with a private bank said. "Some demand from importers seen, but that was not much. Volumes are also low probably before FOMC decision."

While the dollar index recovered slightly from an over five-month low hit on Tuesday, it remained largely weak. The dollar index, which measures the strength in the greenback against a basket of six major currencie, was at 103.33 at 0929 IST, against 103.24 on Tuesday and 103.41 on Monday. The dollar index recovered slightly after the Japanese yen fell against the US currency post the Bank of Japan's decision to keep the benchmark rate unchanged on Wednesday. The Japanese yen carries a weightage of 13.6% in the dollar index.

The Chinese yuan was down in early trade Wednesday, which put pressure on the Indian curreny, dealers said. Some importers purchased dollars to meet their year-end payment obligations, which weighed on the rupee, dealers said. However, most of them waited for the rupee to rise past 86.60 a dollar before placing large bet. "It is a very difficult level to bet on, importers are waiting for dolla/rupee to come down, and exporters waiting for it to go up," a dealer with a foreign bank said.

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 support for the Indian unit at 86.70 a dollar.  (Sourabh Kumar)

India Rupee: Expected range for rupee - Mar 19

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:

(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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