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Informist, Thursday, Mar. 27, 2025

By Pratiksha

NEW DELHI – The rupee ended lower against the dollar but erased a significant portion of its losses as banks persistently sold the greenback on behalf of exporters and as the dollar index retreated from its three-week high, dealers said. A rise in other Asian currencies also supported the Indian unit, they said. 

"Initially, there was a lot of buying (of dollars) after the Trump tariff news but then exporters selling (of dollars) came in. It's (financial) year end, some of the selling momentum is still there," said a dealer at a state-owned bank.

The Indian currency fell to a low of 85.9100 a dollar during early trade and went on to settle at 85.7800 on Thursday, against 85.7050 on Wednesday. The rupee moved in a range of 18 paise during the day. 

With a fall of 0.1% against the greenback, the rupee was the worst performer among its emerging market peers. Other Asian unit, on the contrary, rose 0.2-9.5% against the dollar.

The rupee started the day sharply lower against the dollar as investors' risk appetite took a beating after US President Donald Trump Wednesday announced a 25% tariff on automobiles and certain auto parts imported into the US. 

The tariffs are set to take effect from Apr. 3. "... This is permanent...If you build your car in the United States there is no tariff," Trump said at the Oval Office. Following the announcement, the dollar index hit a three-week high on Wednesday, which also weighed on the Indian currency, dealers said. 

The Indian unit also weakened owing to the shift in the spot date to the next financial year beginning Apr. 1. The currency market will be shut on Mar. 31 and Apr. 1, owing to which Thursday's spot trades will be settled on Apr 2. 

Further, banks rushed to purchase the greenback on behalf of importers, looking to meet their month-end payment needs, which also weighed on the Indian unit, dealers said. Some importers also purchased the US unit on expectation that the local unit may fall further in the coming days, they said. 

"Nobdoy knows what will happen from April on the tariff front. There is some uncertianty there, so buying (of dollars) came in due to that," said a dealer at a private bank. As part of the next round of tariffs, Trump will disclose the particular details of reciprocal tariffs he plans to implement next Wednesday.

However, shortly afterwards, the domestic unit erased some of the losses as banks stepped in to sell the greenback on behalf of exporters for conversion of their foreign exchange-denominated earnings into rupees before closing their books for the financial year ending March.

Further, some foreign banks also sold the greenback, likely for foreign fund inflow into Indian corporates, which also supported the local currency, some dealers said. 

The dollar index came off its three-week high during the day, which also provided some cushion to the local unit, according to dealers. At 1530 IST, the dollar index, which measures the strength in the dollar against a basket of six major currencies, was at 104.47, compared with 104.67 on Wednesday and 104.21 on Tuesday. The index  hit a high of 104.68 on Wednesday, its highest level since Mar. 5.

For a majority of the second half of the trading day, the Indian unit consolidated in a tight range of 85.75-85.80 a dollar. Market participants now await clarity on the US reciprocal tariffs, due on Apr 2. They also await the US Oct-Dec GDP data and weekly initial jobless claims data, due later in the day, for more cues on the health of the world's largest economy.

FORWARDS

The premiums on dollar/rupee forward contracts ended lower across tenures as banks sold the greenback for forward delivery on behalf of Indian corporates, dealers said. A rise in the benchmark 10-year US Treasury yield also dragged the premiums lower, they said. 

Some traders sold forward dollars on expectations that premiums may fall in the near term on likely rate cut by the Reserve Bank of India's Monetary Policy Committee at its next meeting in April. A potential rate cut by the rate-setting panel will lead to narrowing of the differential between Indian and US yields and exert pressure on the premiums, they said. Premiums on forwards of a currency pair are reflective of the interest rate differential between the two countries.

Further, a fall in the liquidity deficit also weighed on the premiums, dealers said. The net liquidity injected by the RBI--a proxy for liquidity conditions--declined Wednesday to INR 407.88 billion, the lowest since Mar. 4, from INR 1.57 trillion Tuesday, as per the Reserve Bank of India data. 

At 1530 IST, the one-year forward premium was 187.02 paise against Wednesday's close of 189.50. On an annualised basis, the premium was 2.18% against Wednesday's 2.20%.

OUTLOOK

On Friday, the rupee will take cues from movement in the dollar index after the release of the US Oct-Dec GDP data and weekly initial jobless claims data, due later in the day, dealers said. They also await more clarity on Trump's next round of tariffs, set to take effect from Apr. 2. 

"It should be a dull day tomorrow (Friday), since its the last day of the year (financial year)," said a dealer at a brokerage firm. "Any comments on tariffs will be looked for by people."

The Indian unit may continue to find support in banks' dollar sales on behalf of exporters, who are looking to meet their financial-year-end payment requirements, dealers said. 

During the day, the rupee is seen moving in a range of 85.50-86.00 against the dollar. Dealers see technical support for the Indian unit at 86.00 a dollar.

India Rupee - World FX: Dollar index off 3-week high ahead of US Oct-Dec GDP

MUMBAI – The dollar index retreated from its three-week high it hit on Wednesday ahead of the US Oct-Dec GDP data, due later in the day. The index had risen on Wednesday after US President Donald Trump announced fresh 25% tariffs on automobiles and certain auto parts imported into the US, according to The White House. The latest tariffs are set to come into effect from Apr. 3. "... This is permanent...If you build your car in the United States there is no tariff," Trump said at the Oval Office.

Trump has warned of higher tariffs, if European Union and Canada work together 'to do economic harm to the USA,' he posted on his Truth social media handle. Following the tariff announcement, the index rose to 104.68, its highest level since Mar. 5. At 1522 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 104.51, compared to 104.67 on Wednesday and 104.21 on Tuesday.

Meanwhile, Minneapolis Federal Reserve Bank President Neel Kashkari said he is uncertain about the impact of the higher tariffs on the US economy but hinted at the possibility that they could push prices up, arguing for higher interest rates. Kashkari added that the biggest challenge for the US central bank is to bring the inflation down to Fed's 2% target.  

"If the economy remains strong and inflation remains above our target, then I believe the current, modestly restrictive policy will remain appropriate until there is confidence inflation is converging to 2%," St. Louis Fed President Alberto Musalem said at another event. 

The Swiss franc was up 0.1% and the pound sterling rose 0.3% against the greenback. UK's finance minister, Rachel Reeves, said they were in intensive talks with the US regarding tariffs.

Canadian dollar traded 0.1% down after the announcement of the new tariff measures by the US, as Canada is one of the top exporters of automobiles to the US. Earlier in the day, Canadian Prime Minister Mark Carney called the new tariffs a 'direct attack' on his country and its car industry.

The Euro was up 0.1% against the greenback ahead of European Central Bank President Christine Lagarde's speech, due later in the day. Meanwhile, reacting to the US tariff announcements, European Commission President Ursula von der Leyen said the bloc would assess the tariffs and its impact before any response. 

The Japanese yen was down 0.2% against the greenback on Thursday as Japan's government warned of a significant impact of US tariffs on its economic ties with the US as well as on global trade. 

Japanese Prime Minister Shigeru Ishibu said his government would 'put all options on the table', in response to the US tariff measures. Further, the latest automobile tariffs could greatly impact the Japanese economy, as it is one of the top suppliers of automobiles to the US. A weak export may negatively impact its economy, thereby reducing the likelihood of the Bank of Japan raising interest rates at its next policy decision in May.

The Australian dollar was up 0.3% and the New Zealand dollar rose 0.4% against the greenback due to a retreat in the dollar index.  (Gowri Lakshmi)

India Rupee: Premiums down as banks sell forward dollars for corporates

MUMBAI – The premiums on dollar/rupee forward contracts were down on most tenors as banks sold greenback for forward delivery on behalf of Indian corporates, dealers said. A rise in the benchmark 10-year US Treasury yield also dragged down the premiums, dealers said. 

"Premiums have been range-bound for quite a few days now," a dealer with a state-owned bank said. "There are people on both sides because people are unsure where the levels will go either on the spot or forward. But today, after some paying interest in the morning, there is good receiving."

The premium on the one-year dollar/rupee forward contract moved nearly seven basis points Thursday. The one-year forward premium was 185.53 paise at 1437 IST against Wednesday's close of 189.50 and Tuesday's close of 190.00. On an annualised basis, the premium was 2.16% against Wednesday's 2.20% and 2.22% on Tuesday.

Some traders sold forward dollars as they anticipated a fall in premiums due to heightened expectations of a rate cut by the Reserve Bank of India at its next Monetary Policy Committee Meeting in April.

Further, a fall in the liquidity deficit also pulled down premiums, dealers said. The net liquidity injected by the RBI--a proxy for liquidity conditions--declined Wednesday to INR 407.88 billion, the lowest since Mar. 4, from INR 1.57 trillion Tuesday, as per Reserve Bank of India data.

Moreover, the benchmark 10-year US Treasury yield rose four basis points Wednesday to 4.35%, dealers said. The yield edged higher further in early European trade and was around 4.38%. Yield rose ahead of the release of economic data from the US, including the weekly jobless claims figures, due later in the day. Investors also await the release of US personal consumption expenditure data, the preferred gauge of the US Federal Reserve to measure inflation, on Friday. (Sourabh Kumar)

India Rupee: Erases some losses on exporters' dlr sales, fall in dlr index

MUMBAI – The rupee erased some of the losses incurred in early trade against the dollar as banks persistently sold the greenback on behalf of exporters, dealers said. An ease in the dollar index from the three-week high it hit on Wednesday also aided the Indian unit, they said. The rupee touched a low of 85.9100 a dollar earlier in the day.

"The year-end madness is clearly there, there is no direction for the rupee today (Thursday)," a currency trader at a private bank said. "No major data came yesterday (Wednesday), so after the initial reaction, the (dollar) index has also fallen." 

Banks continued to sell dollars on behalf of exporters to meet their financial-year end payments, dealers said, which aided the rupee in paring some losses against the dollar. Earlier in the day, a few banks sold dollars for some foreign-fund inflows into Indian corporates, which also gave support to the Indian currency, they said.

The dollar index, retreated slightly from the three-week high it hit Wednesday, as investors assessed the impact of the latest tariffs by the US on imports of automobiles and awaited key economic data from the US. The US Oct-Dec GDP data and weekly initial jobless claims data are due later in the day.

The index rose Wednesday after US President Donald Trump announced fresh 25% tariffs on imports of automobiles and automobile parts, set to take effect on Apr. 3. At 1246 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 104.43, compared to 104.67 on Wednesday and 104.21 on Tuesday. The index rose to 104.68 on Wednesday, the highest level since Mar. 5. 

A rise in domestic equities also aided the rupee, according to some dealers. At 1252 IST, both the benchmark indices, the Nifty 50 and BSE Sensex, were up 0.4% each. 

For the rest of the day, the rupee is seen moving in a range of 85.60-86.00 against the dollar. Dealers see immediate technical support for the Indian unit at 86.00 a dollar. (Gowri Lakshmi)

India Rupee: Technical Levels for rupee - Mar 27

MUMBAI – At 1119 IST, the rupee was at 85.7650 per dollar. At 0900 IST, the rupee was at 85.9100 a dollar, against the previous close of 85.7050. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Gowri Lakshmi and Pratiksha)

India Rupee: Falls as risk appetite hit after US' auto tariff announcement

MUMBAI – The rupee fell sharply against the US dollar on Thursday as investors' risk appetite took a hit after US President Donald Trump Wednesday announced 25% tariff on automobiles and certain auto parts imported into the US, dealers said. The tariffs are set to take effect from Apr. 3. "... This is permanent...If you build your car in the United States there is no tariff," Trump said at the Oval Office.

Following the announcement, the dollar index hit a three-week high on Wednesday, which also weighed on the Indian currency, dealers said. At 0950 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 104.34, compared to 104.67 on Wednesday and 104.21 on Tuesday. The index had hit a high of 104.68 on Wednesday, its highest level since Mar. 5.

"Given the current global and domestic market dynamics, the USD/INR (dollar/rupee) pair is expected to find strong support around 85.40-85.50 (a dollar), with the potential for a rebound towards 86.50 in the short term," Amit Pabari, managing director at CR Forex, said in note.

Further, banks purchased dollars on behalf of importers, looking to meet their month-end payment obligations, dealers said. "Today the dollar/rupee is seen upticking. It's mostly importer buys (of dollars) to meet their month end payments, so we can expect a close-call to 86.00 (a dollar)," a dealer at a state-owned bank said.

The Indian unit also came under pressure as some banks purchased the greenback on behalf of oil marketing companies and other importers, fearing a further fall in the rupee, dealers said.

Meanwhile, some banks sold dollars on behalf of exporters, looking to meet their financial year-end payment requirements, following which the rupee erased some of its losses, dealers said. Some banks' dollar sales, likely for foreign fund inflows into few Indian companies, also provided cushion for the Indian unit, according to some dealers.

Market participants now await the Oct-Dec US GDP print and the weekly initial jobless claims data to get more cues on the health of the US economy. Both are due to be released later in the day.

For the rest of the day, the rupee is seen moving in a range of 85.50-86.00 against the dollar. Dealers see immediate technical support for the Indian unit at 86.00 a dollar. (Gowri Lakshmi)

India Rupee - Asia FX: Most units up as dollar index retreats from 3-wk high

MUMBAI – Most Asian currencies were up against the dollar as the dollar index fell from the three-week high it hit on Wednesday. The dollar index hit a three-week high of 104.68 after US President Donald Trump announced the imposition of a 25% tariff on imports of automobile and certain parts. Such tariffs would be applicable from Apr. 3.

Hope of less severe reciprocal tariffs by the US also aided most Asian currencies. On Wednesday, Trump had indicated there might be some leniency on imposing reciprocal tariffs, when they are likely to come into effect on Apr. 2.

The dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 104.35 against Wednesday's 104.67 and Tuesday's 104.21 level. Market participants now await the Oct-Dec US GDP and the weekly initial jobless claims data to get more cues on the US economy. Both are due to be released later in the day.

The Philippines peso and South Korean won were up 0.3% and 0.2%, respectively, against the greenback. The Taiwan dollar was down 0.1% against the greenback, weighed by a fall in the benchmark Taiwan Stock Exchange Capitalization Weighted Stock Index, which saw a 1.5% decline on Thursday afternoon. The Malaysian ringgit fell 0.1%, while the Thai baht rose 0.2% against the greenback.

The Indonesian rupiah was up 0.1% against the dollar after hitting multi-decade low earlier this week on Tuesday. After the fall, Fitra Jusdiman, Bank Indonesia's director of monetary and securities asset management, said the Bank Indonesia always monitored the market, and was ready to step in to support the currency.  (Sourabh Kumar)

India Rupee: Expected range for rupee - Mar 27

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 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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