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Informist, Tuesday, Mar. 25, 2025

By Sourabh Kumar

MUMBAI – The rupee ended down against the dollar on Tuesday, reversing nine days of rise, as banks persistently purchased the greenback on behalf of importers, including oil marketing companies, mostly to meet their year-end payment requirements, dealers said. 

"There were mostly bidding (dollar buying), and it continued throughout the day," a dealer with a state-owned bank said. After moving in a range of 25 paise, the rupee settled at 85.7550 a dollar on Tuesday compared with 85.6350 on Monday. A fall in most other Asian currencies, which were down between 0.1% to 0.5%, weighed on the Indian currency, dealers said.

The rupee started the day on a positive note, opening slightly higher against the dollar. However, banks soon rushed to purchase dollars for importers, who wanted to take advantage of relatively lower dollar/rupee levels. The importers, including oil marketing companies, also purchased the greenback to meet their financial year-end payment requirements.

Oil companies purchased dollars as they also feared crude oil prices may rise further, dealers said. Oil prices increased after US President Donald Trump announced plans to impose a 25% tariff on countries that buy oil and gas from Venezuela. At 1530 IST, the May Brent Crude price on the Intercontinental Exchange was at $73.48 per barrel, up from $73.00 per barrel on Monday and $72.16 per barrel on Friday.

While importers' dollar demand put pressure on the rupee, some banks, including a US-based bank and a UK-based bank, sold dollars, which limited the downward movement in the Indian currency, dealers said. Foreign banks sold the greenback for their overseas clients who wanted to invest in Indian financial markets, dealers said.

While some exporters sold dollars fearing the Indian currency may see a further upward move in coming days, most of them refrained from selling large quantums of dollars, waiting for the rupee to fall more, dealers said. 

The dollar index was largely steady. At 1530 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was 104.24 at 1530 IST against 104.31 on Monday and 104.15 on Friday. 

"I think we may now see a less upward movement in the rupee, which for the last few days was also due to long dollar cutting," a dealer at a private bank said. In addition to the impact of foreign fund inflows into domestic equities, the rupee had risen last week as exporters have been continuously selling dollars, trimming their long dollar positions, dealers said. 

FORWARDS

Premium on the one-year dollar/rupee forward contract ended at over a two-week high on Tuesday as banks purchased dollars for forward delivery on behalf of importers for financial year-end-related payment requirements, dealers said.

However, some banks sold forward dollars, taking advantage of relatively higher forward premiums, which capped the rise, they said. 

"In my view, forward premiums should not rise too much because we are seeing the possibility of a rate cut in April," a dealer with another private bank said. If the Reserve Bank of India cuts the repo rate in April, the interest rate differential between the US and India will fall, potentially dragging forward premiums lower, dealers said. Forwards of a currency pair are reflective of the interest rate differential between the two countries.

At 1530 IST, the one-year dollar/rupee forward premium was at 2.22% on an annualised basis, against 2.18% on Monday. On an absolute basis, the premium was 190.00 paise against 186.50 paise on Monday. 

OUTLOOK

On Wednesday, the rupee will take cues from movement in the dollar index and Chinese yuan, dealers said. Market participants will keep a watch on the US Consumer Confidence Index, due later in the day. They also await more clarity on US President Donald Trump's reciprocal tariffs, set to take effect from Apr. 2. 

Foreign banks may continue to sell dollars for foreign fund inflow into domestic markets, which could keep the rupee supported, dealers said. However, dealers expect the RBI to intervene through dollar purchases if the rupee appreciates sharply. During the day, the rupee is seen moving in a range of 85.30-86.00 against the dollar. Dealers see technical support for the Indian unit at 85.90 a dollar.

India Rupee - World FX: Yen rises as BoJ minutes hint at more rate hikes

MUMBAI – The Japanese yen was up 0.1% against the US dollar Tuesday after minutes of the Bank of Japan's January policy meeting showed officials discussing the pace of rate hikes going ahead. The BoJ hiked its short-term benchmark rate by 25 basis points to 0.5% in January.

The euro was steady against the US dollar, after a marginally higher German IFO Business Climate index reading for March at 86.7, against 86.6 expected in a poll by Dow Jones. This supported the euro.

The pound sterling was also steady against the greenback ahead of the UK's CPI data on Wednesday. The Canadian dollar was down 0.1% against the dollar as investors were still looking for clarity on US President Donald Trump's tariff policies. Canada has a major trade exposure to the US.

The Australian dollar was up 0.1% against the greenback after the government's surprise tax cuts announced in the budget on Tuesday. The dollar index, which measures the strength of the greenback against a basket of six major currencies, was steady at 104.29 at 1525 IST against Monday's 104.31 and Friday's 104.15. 

The dollar index recovered on Monday after data showed an increase in business activity in the US. The S&P Global flash US composite purchasing managers' index output index rose to 53.5 in March from 51.6 the previous month. A reading above 50 indicates expansion, while one below 50 indicates contraction.  (Sourabh Kumar)

India Rupee:1-year premium hits near 3-wk high on importers' fwd dollar buys

MUMBAI – The premium on the one-year dollar/rupee forward contract hit a near three-week high on Tuesday as banks purchased dollars for forward delivery on behalf of importers, mostly related to their financial year-end payment requirements, dealers said. Meanwhile, some banks sold forward dollars to take advantage of relatively higher forward premiums, which capped the rise, they said. 

Before reversing slightly, the one-year forward premium hit 2.22% on an annualised basis, the highest since Mar. 5. At 1418 IST, the one-year dollar/rupee forward premium was 2.21%, against the previous close of 2.18%. On an absolute basis, it was 189.75 paise, against 186.50 paise on Monday.

"There is movement on both sides today (Tuesday)," a dealer with a state-owned bank said. "In my view, forward premiums should not rise too much because we are seeing the possibility of a rate cut in April."

In the event of a decision to cut the repo rate by the Reserve Bank of India at its Monetary Policy Committee meeting in April, the interest rate differential between the US and India would fall, potentially dragging forward premiums lower. Forwards of a currency pair are reflective of the interest rate differential between the two countries.

Further, the yield on the benchmark 10-year US Treasury note rose 9 basis points on Monday, which limited the upward movement in forward premiums. The 10-year US Treasury yield rose on Monday as US President Donald indicated that he might soften his stance on reciprocal tariffs. The yield also rose as S&P Global's flash US Composite Purchasing Manager's Index Output Index showed that business activity increased this month in comparison to the last month.  (Sourabh Kumar)

India Rupee: Sharply down on importers' persistent dollar purchases

MUMBAI – The rupee was sharply down against the dollar as banks continued to purchase the greenback on behalf of importers for their year-end payment requirements, dealers said. Apart from general importers, increased dollar purchases by oil marketing companies also weighed on the Indian currency, dealers said.

"There is continuous bidding from oil companies and other importers, but a few foreign banks are also selling at higher levels," a dealer with a foreign bank said. "After touching the day's high, the dollar/rupee quickly came down because a few foreign banks sold one lot at those levels."

Due to continuous demand for the greenback by importers, the rupee hit the day's low of 85.8350 a dollar in early trade. Oil marketing companies also purchased dollars to meet their payment requirements and on fear that crude prices may rise further, dealers said. 

Crude oil prices increased after US President Donald Trump announced plans to impose a 25% tariff on countries that buy oil and gas from Venezuela. At 1306 IST, the May Brent Crude prices on the Intercontinental Exchange was at $73.18 per barrel, up from $73.00 per barrel on Monday and $72.16 per barrel on Friday.

Meanwhile, some foreign banks, including a US-based and a UK-based bank, sold dollars, which limited the fall in the rupee, dealers said. Foreign banks sold dollars for their overseas clients who wanted to invest in Indian financial markets, dealers said. 

A slight rise in the dollar index in early European trade also weighed on the rupee, dealers said. The dollar index, which measures the strength in the greenback against a basket of six major currencies, was 104.40 at 1314 IST against Monday's 104.31 and Friday's 104.15. A pick up in business activity in the US this month, as shown by a rise in S&P Global's flash US Composite Purchasing Manager's Index Output Index for March, aided the US currency, lifting the dollar index up.

During the day, the rupee is seen moving in a range of 85.40-85.90 against the dollar. Dealers see immediate technical support for the Indian unit at 85.90 a dollar. (Sourabh Kumar)

India Rupee: Technical Levels for rupee - Mar 25

MUMBAI – At 1129 IST, the rupee was at 85.7225 per dollar. At 0900 IST, the rupee was at 85.5900 a dollar, against the previous close of 85.6350. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Pratiksha and Sourabh Kumar)

India Rupee: Falls as banks buy dollars for importers, Asian currencies down

NEW DELHI – The rupee fell against the dollar on Tuesday as banks bought dollars on behalf of importers, who wanted to make the most of the sharp gains notched up by the Indian currency in the recent past, dealers said. The Indian unit settled at a near three-month high on Monday. So far in March, the rupee has appreciated almost 2% against the greenback.

"It (the fall in rupee) is mostly because of importers. They are booking profits at these levels," said a dealer at a state-owned bank. "It is possible that the rally we saw in the rupee may be done now. Most of the exporters may have settled their year-end transactions."

Dealers said some importers bought the greenback to take advantage of the relatively lower dollar/rupee levels, while others purchased the US unit to meet their month-end and financial year-end payment requirements. 

Further, a fall in other Asian currencies, tracking a rise in the dollar index on Monday, also weighed on the Indian unit, dealers said. Asian units declined 0.1-0.2% against the greenback in early trade. 

The dollar index rose slightly on Monday after data showed robust business activity in the US. The S&P Global flash US composite purchasing manager's index output index rose to 53.5 in March from 51.6 the previous month. A reading above 50 indicates expansion, while below 50 shows contraction. At 0940 IST, the dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 104.27 against 104.31 on Monday and 104.15 on Friday. The index rose to a high of 104.44 on Monday. 

However, a rise in domestic equities limited losses for the Indian unit, according to dealers. Both the Nifty 50 and Sensex were up 0.6% each at 0940 IST. 

During the day, the rupee is seen moving in a range of 85.40-85.90 against the dollar. Dealers see immediate technical support for the Indian unit at 85.90 a dollar. (Pratiksha)

India Rupee - Asia FX: Most down as dollar index recovers post higher US PMI

MUMBAI – Most Asian currencies were down against the dollar Tuesday as the dollar index rose slightly on Monday, after data showed a recovery in the business sector in the US. The S&P Global flash US composite purchasing managers' index for the US rose to 53.5 in March from 51.6 the previous month. A reading above 50 indicates expansion, while one below 50 indicates contraction.

The dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 104.28 at 0940 IST, against 104.31 on Monday and 104.15 on Friday.

Further, a few reports suggested that US President Donald Trump may provide some leeway while imposing reciprocal tariffs. He might exclude some sector-specific tariffs when the imposition comes into effect on Apr. 2, as per reports from The Wall Street Journal. This somewhat improved risk sentiment among investors.

The Taiwan dollar was down 0.1% against the dollar in early trade Tuesday. The losses were limited as data released Monday showed the unemployment rate in Taiwan dropped slightly to 3.35% in February from the previous month's reading of 3.37%. The South Korean won was steady against the greenback. However, a fall in consumer sentiment amid political uncertainty in the country weighed on the currency.

Under pressure from a fall in the benchmark Philippines stock index, which was down over 1% in early trade Tuesday, the Philippines peso declined 0.1% against the US dollar. The Malaysian ringgit was also down 0.1% against the US dollar. Market participants assessed the central bank's projections for the country's economic growth between 4.5% and 5.5% in 2025, after the economy expanded 5.1% last year. The central bank governor said the economy may see some effect of US tariffs. The Thai baht was down 0.2% and the Indonesian rupiah fell 0.4%.  (Sourabh Kumar)

India Rupee: Expected range for rupee - Mar 25

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)

End

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

Edited by Saji George Titus

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