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Informist, Thursday, Apr. 3, 2025

 

By Gowri Lakshmi

 

MUMBAI – The rupee shrugged off its initial reaction to US President Donald Trump's sweeping reciprocal tariffs and settled at an over three-month high against the dollar Thursday as the dollar index declined to a six-month low, dealers said. Foreign fund inflows into the domestic debt market also aided the Indian currency, they said.

 

"We did expect rupee to inch toward 86 a dollar after the tariffs, but importers had already hedged their positions at earlier levels so the panic was not there today (Thursday) and the inflows we have been seeing in debt also aided," a dealer at a private bank said. "Emerging markets were hit in early trade but as the dollar weakened, most currencies gained back."

 

After falling to a low of 85.7600 a dollar early in the trade, the Indian unit settled at 85.4300 against the previous close of 85.4975. The rupee gained almost 0.1% against the greenback while other Asian currencies were mixed. The Chinese yuan fell 0.4% against the dollar, while the South Korean won rose 0.4%.

 

The rupee started the day sharply lower at 85.7300 as risk appetite was hit after Trump announced tariffs against all major trading partners, calling it a 'Liberation Day' for the US. Trump slapped a 27?justed tariff on imports from India amid ongoing bilateral trade talks. The reciprocal tariffs will take effect from Wednesday, a White House statement said.

 

Banks purchased dollars on behalf of foreign portfolio investors, who pulled out funds from the Indian stock market due to concerns that a full-blown trade war could trigger a global economic slowdown, dealers said. Both the benchmark share indices, the Nifty 50 and BSE Sensex, ended 0.4% lower each. Some banks also bought dollars on behalf of importers, who feared the Indian unit would fall further, dealers said.

 

However, the rupee started to pare some of its losses as foreign banks sold dollars for foreign fund inflows, likely into the government debt market, dealers said. In March, FPIs had infused over $3 billion in the debt market on expectations of a rate cut by the Reserve Bank of India's Monetary Policy Committee on Wednesday.

 

"Most inflows are into debt market recently. The quantum of the inflows may not be helping rupee to rise sharply but it is sufficient enough to negate the dollar demands," a dealer at a state-owned bank said. 

 

The dollar index tumbled to a near six-month low as investors rushed to other safe-haven currencies like the yen and Swiss franc, after Trump's tariff announcements. The Japanese yen jumped up 2% against the greenback, while the Swiss franc rose 2.4%.

 

The dollar index also fell because of concerns around growth of the US economy after the tariff announcements. At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 101.51, compared to 103.69 on Wednesday and 104.20 on Tuesday. The index fell to 101.37, the lowest level since Oct. 2.

 

"These seem to be extraordinary times and so we are seeing some extraordinary moves in the currencies. Intra-day rupee opened weaker by 27 paise on the levy of 27% trade tariffs on India by US despite the trade talks going on between the two nations, but rupee recovered quickly as exporters and foreign entities sold dollars to bring rupee to 85.50," said Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP.

 

	AT 1530 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	85.4300	85.7300	85.4275	85.7600	85.4975
1-year dlr/rupee fwd (paise)	191.05	188.00	192.11	188.00	187.00

 

FORWARDS

The premium on dollar/rupee forward contracts ended higher across tenures, tracking a fall in the benchmark US Treasury yield, dealers said. The yield on the 10-year US Treasury note fell due to fear of recession in the US after Trump announced reciprocal tariffs on several countries.

 

Moreover, some banks purchased forward dollars to take advantage of the arbitrage opportunity between the offshore non-deliverable forward and onshore forward premiums, keeping premiums higher, dealers said.

 

At 1530 IST, the one-year forward premium was 191.05 paise against Wednesday's close of 187.00. On an annualised basis, the premium was 2.24%, up from Wednesday's close of 2.18%.

 

OUTLOOK

On Friday, the rupee will take cues from the movement of the dollar index and offshore Chinese yuan, dealer said. Market participants will keep a close watch on developments related to the proposed bilateral trade agreement between the US and India.

 

"I think with the big US tariff thing out of the way now, the market can relax a bit," said a dealer at a state-owned bank. "We may see some consolidation in the rupee now, unless some big development happens on this front."

 

Amid the risk-off sentiment among investors, dealers expect overseas investors to continue exiting the domestic equity market, which may put some pressure on the rupee. However, foreign fund inflows into the government debt market are likely to continue, according to dealers.

 

During the day, the rupee is seen moving in a range of 85.40-86.00 against the dollar. Dealers see technical resistance for the Indian unit at 85.40 a dollar.

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India Rupee - World FX: Dlr index plunges to six-mo low post Trump tariffs

 

	AT 1441 IST	HIGH	LOW	PREVIOUS
GBP/USD	1.3176	1.3178	1.2974	1.2998
EUR/USD	1.1037	1.1040	1.0806	1.0827
NZD/USD	0.5803	0.5804	0.5683	0.5715
AUD/USD	0.6340	0.6341	0.6227	0.6260
USD/JPY	146.6070	148.7060	146.5750	148.6560
USD/CAD	1.4135	1.4319	1.4118	1.4245
EUR/JPY	161.8200	161.9700	160.1400	160.9170
CHF/USD	1.1563	1.1566	1.1336	1.1325
EUR/CHF	0.9544	0.9578	0.9521	0.9547

 

 

MUMBAI – The dollar index plummeted to a near six-month low on Thursday following an aggressive-than-expected tariff imposition by US President Donald Trump against its major trading partners. On Wednesday, Trump announced reciprocal tariffs against multiple countries, triggering concerns about inflation and economic growth worldwide.

 

Trump announced a minimum tariff of 10% on most goods imported to the US, effective Saturday. The index also fell as growth concerns over the US economy rose after the tariff announcements.

 

At 1441 IST, the dollar index, which measures the strength in the dollar, against a basket of six major currencies, was at 102.25, compared with 103.69 on Wednesday and 104.20 on Tuesday. The index fell to 102.13, the lowest level since Oct. 4. 

 

The euro was up 1.6%, hitting a near six-month high against the greenback. Trump had announced a 20?justed tariff on European Union. European Commission President Ursula von der Leyen hinted concerns over growth in the world economy after Trump announced tariffs. "President Trump's announcement of universal tariffs on the whole world, including the EU, is a major blow to the world economy," Ursula said. "We are already finalising a first package of countermeasures in response to tariffs on steel. And we are now preparing for further countermeasures, to protect our interests and our businesses if negotiations fail."

 

The Japanese yen jumped 1.4% against the greenback as investors found shelter under safe-haven yen. Data on Wednesday showed that Japan's service sector stagnated last month while private sector activity contracted. The au Jibun Bank Japan services business activity index fell to 50 in March from 53.7 the month prior. It capped the rise in the Japanese currency.

 

The Swiss franc also rose sharply by 1.5% against the greenback on the back of demand for safe-haven assets. Reacting to the tariff news, Swiss President Karin Kelleter-Sutter wrote on social media X that the country will 'quickly determine' the next steps as countermeasure to US tariffs. "The country's long-term economic interests are paramount. Adherence to international law and free trade remain core values," she wrote. The Washington slapped 31% reciprocal tariffs on Switzerland.

 

The Australian dollar was up 0.6% and the New Zealand dollar was up 0.9% against the greenback. The Australian currency gained after strong economic data from China. Since China is a major importer of Australian goods, any change in the Chinese economic outlook affects Australia. The Caixin services PMI rose to 51.9 last month from 51.4 in February. A PMI reading above 50 indicates expansion in the sector. Data released on Thursday showed the country's composite PMI rose to 51.6 in March, up from 50.6 a month prior. 

 

The pound sterling rose 1.2% as the purchasing managers' index came in higher in March from February. The UK composite PMI rose to 51.5 in March, from February's 50.5. However, the reading was lower than the preliminary estimate of 52.0 in March. UK's Prime Minister Keir Starmer told heads of business that the tariffs will 'clearly have an economic impact' and that his council of ministers would respond with 'cool and calm heads.'

 

The Canadian dollar was up 0.7% against the US unit. Canadian Prime Minister Mark Carney said on Wednesday that Canada will fight Trump's tariffs with countermeasures. "It's essential to act with purpose and with force, and that's what we will do," Carney said. Canada was previously imposed a 25% tariff but was exempted from the latest reciprocal tariffs.  (Gowri Lakshmi)

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India Rupee: Pares most losses on FX inflows, slump in dlr index to 6-mo low

 

	AT 1309 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	85.5200	85.7300	85.5175	85.7600	85.4975

 

MUMBAI – The rupee pared most of the losses against the US dollar incurred in early trade as foreign banks sold the greenback for foreign fund inflows, likely into the debt market, dealers said. A slump in the dollar index also supported the local unit, they said. "There is not much reaction to the (US) tariffs in dollar/rupee. It's mostly because dollar has fallen so much and debt inflows have been there this week," said a dealer at a state-owned bank. 

 

In March, FPIs infused nearly $3 billion in the debt market on expectations of a rate cut by the Reserve Bank of India's Monetary Policy Committee on Wednesday. After US President Donald Trump's announcement of 27% tariffs on imports from India early Thursday, traders expect the rate setting panel to pursue faster or deeper rate cuts to offset the projected hit to growth. 

 

The dollar index tumbled to a near six-month low on Thursday as investors found shelter under other safe-haven assets after Trump announced reciprocal tariffs. The Japanese yen jumped 1.7% against the greenback while the Swiss franc rose 1.5%. The index also fell as growth concerns around the US economy rose after the tariff announcements. 

 

Trump announced reciprocal tariffs against over 60 countries and territories, leading to expectations of a full-fledged global trade war. Some of the US' top trading partners, such as China, have been hit the hardest with substantially higher tariffs. At 1309 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 102.75, compared with 103.69 on Wednesday and 104.20 on Tuesday. The index fell to a 102.40, the lowest level since Oct. 8. 

 

However, some banks purchased the greenback on behalf of importers, fearing a sharp decline in the rupee, which weighed on the local currency, dealers said. "While a knee-jerk reaction wasn't there in market after tariffs, importers continue to buy on dips (in dollar/rupee)," the currency trader at the private bank said. 

 

A fall in domestic stock market also weighed on the Indian unit, according to some dealers. At 1234 IST, the benchmark indices, the Nifty 50 and the BSE Sensex were down 0.3% and 0.4%, respectively. 

 

For the rest of the day, the rupee is seen moving in a range of 85.50-85.85 against the dollar. Dealers see immediate technical support for the Indian unit at 85.80 a dollar. (Gowri Lakshmi)

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India Rupee: Premium up as US yields fall; tariffs stoke recession fear

 

	AT 1233 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	85.5700	85.7300	85.5600	85.7600	85.4975
1-year dlr/rupee fwd (paise)	190.50	188.00	190.55	188.00	187.00

 

MUMBAI – The premium on dollar/rupee forward contracts was higher across tenors, tracking a fall in the benchmark US Treasury yields, dealers said. The yield on the 10-year US Treasury note fell due to fear of recession in the US after President Donald Trump announced reciprocal tariffs on several countries.

 

On Wednesday, Trump announced reciprocal tariffs on several countries, including India. Washington slapped an adjusted 27% reciprocal tariff on imports from India amid ongoing talks for a bilateral trade agreement. The reciprocal tariffs will take effect from Wednesday, a White House statement said.

 

"Primarily it is the fall in UST which led to a rise in our premiums," a dealer with a state-owned bank said. "Some arbitrage paying is also there, we are expecting it to remain higher," the dealer added.

 

Given the rising possibility of a rate cut by the Reserve Bank of India next week and surplus liquidity in the banking system, "ideally forward premiums should have come down," another dealer with a private bank said. The central bank absorbed liquidity to the tune of INR 1.93 trillion on Wednesday, up from INR 1.42 trillion seen Tuesday. The RBI's Monetary Policy Committee is expected to cut the repo rate by 25 basis points on Wednesday, as per dealers. 

 

Moreover, some banks have also been purchasing forward dollars to take advantage of the arbitrage opportunity between the offshore non-deliverable forward and onshore forward premiums, keeping premiums higher, dealers said. 

 

Falling US Treasury yields have kept premiums elevated, dealers added. So far this calendar year, the 10-year US Treasury yield has fallen about 58 bps. The 10-year US Treasury yield was 4.06% around Thursday noon, down from Wednesday's close of 4.20%. 

 

At 1223 IST, the one-year forward premium was 190.50 paise against Wednesday's close of 187.00. On an annualised basis, the premium was 2.23%, up from Wednesday's close of 2.18%.  (Sourabh Kumar)

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India Rupee: Technical Levels for rupee - Apr 3

 

MUMBAI – At 1045 IST, the rupee was at 85.6850 per dollar. At 0900 IST, the rupee was at 85.7300 a dollar, against the previous close of 85.4975. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

 

Participants	S2	S1	R1	R2
State-owned bank	85.78	85.75	85.62	85.58
State-owned bank	85.85	85.80	85.67	85.58
Foreign bank	86.00	85.90	85.40	85.30
Brokerage firm	85.86	85.75	85.50	85.35

(Gowri Lakshmi and Sourabh Kumar)

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India Rupee - Asia FX: Most units down as Trump announces reciprocal tariffs

 

MUMBAI – Most Asian currencies traded lower against the greenback Thursday after US President Donald Trump announced tariffs against the country's major trading partners. Trump announced reciprocal tariffs against over 60 countries and territories, sparking concerns about inflation and growth. Some of US' top trading partners, such as China, have been hit the hardest with substantially higher tariffs. Trump slapped 34% tariff on China, 46% levy on Vietnam, and 32% tariff on Taiwan.

 

"For decades, our country has been looted, pillaged, raped and plundered by nations near and far, both friend and foe alike," Trump said while announcing the tariffs at White House Rose Garden.

 

Following the announcement, the dollar index tumbled and fell to a near six-month low on Thursday as investors rushed to safe-haven assets. The Japanese yen was up 1.0% against the greenback, while the Swiss franc was up 0.6%. The index also fell as growth concerns over the US economy rose after the tariff announcements. At 0932 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 102.99, the lowest level since Oct. 14. The index was 103.69 on Wednesday and 104.20 on Tuesday.

 

The South Korean won was down 0.3% against the greenback after Washington imposed an adjusted reciprocal tariff of 26% on the country. South Korea's Trade Minister Ahn-Duk geun said the government is closely analysing the impact of US tariffs and will prepare emergency support measures to protect all industries, media reported. Ahn-Duk also said top trade negotiators will visit Washington for close consultations, Dow Jones reported. 

 

"This is a very serious situation where a global tariff war has become a reality. The government must pour all of its capabilities into overcoming the trade crisis," South Korea's interim leader Han Duck-soo said, reacting shortly after Trump's announcement.  

 

The Chinese yuan was down 0.4?ter Beijing was slapped with a 34?justed tariff and Chinese authorities pledged to retaliate, spreading fears of a global trade war between two of the largest economies of the world. The Chinese ministry of commerce vowed to hit back with unspecified measures in a statement released earlier in the day, adding that the tariffs threatened the stable global supply chain. 

 

The Indonesian rupiah was down 0.2%, with Washington imposing 32?justed reciprocal tariff. Further, data on Wednesday also showed Indoneisa's manufacturing purchasing managers' index fell to 52.4 in March from a 11-month high of 53.6 in February . 

 

Malaysia has been hit with 24% tariff on an adjusted basis, after which Malaysian ringgit slipped 0.4% against the greenback. The Taiwan dollar was down 0.2?ter Washington imposed a 32?justed tariff. Thailand was hit with 37?justed tariff. The Thai baht was down 0.2% against the greenback. 

 

Bucking the trend, the Philippines' peso was up 0.1%. The US has imposed 18?justed reciprocal tariff on the Philippines.  (Gowri Lakshmi)

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India Rupee: Sharply dn; investor sentiment weak after Trump imposes tariffs

 

	AT 0931 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	85.6800	85.7300	85.6900	85.7600	85.4975

 

MUMBAI – The rupee was sharply down against the US dollar Thursday as investors became risk-averse after US President Donald Trump announced a sweeping 26% tariff on India, in addition to tariffs on several other countries, dealers said.

 

"The panic, as expected, is not there. Some panic buying was there before the market opened, now it has receeded and some inflows into bond also aided (the rupee)," a dealer at a state-owned bank said. 

 

The rupee came under immense pressure at open as banks rushed to purchase the greenback on behalf of importers, who feared the rupee may fall more, dealers said.

 

However, shortly after the initial rush, demand for dollars subsided as most importers had hedged their positions "sufficiently" and may only purchase dollars excessively if the rupee rises, a dealer at a state-owned bank said. The rupee fell to a low of 85.7600 shortly after the domestic spot market opened. "Market is only reacting to the (tariff) news, there is no panic situation," a currency dealer at a brokerage firm said.

 

The rupee also came under pressure, tracking a fall in other Asian currencies. Most Asian currencies were down against the greenback, with the Chinese yuan falling 0.4%. A fall in domestic equities also weighed on the Indian unit, dealers said. At 0937 IST, the benchmark indices, the Nifty 50 and the BSE Sensex were down 0.3?ch. 

 

However, some foreign fund inflows, likely into government bonds market, aided the rupee, dealers said. A fall in the dollar index also supported the rupee, they said. The index plunged to a near-six-month low Thursday as investors found shelter under other safe-haven assets. The Japanese yen jumped 1.0% against the greenback while the Swiss franc was up 0.6?ter Trump announced reciprocal tariffs. 

 

At 0940 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 103.04, compared to 103.69 on Wednesday and 104.20 on Tuesday. The index fell to 102.98, the lowest since Oct. 14. 

 

During the day, the rupee is seen moving in a range of 85.50-86.00 against the dollar. Dealers see key technical support for the Indian unit at 85.80 a dollar.  (Gowri Lakshmi)

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India Rupee: Expected range for rupee - Apr 3

 

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: 

 

PARTICIPANT	SUPPORT	RESISTANCE
Private bank	85.90	85.60
Foreign bank	85.95	85.55
Foreign bank	86.60	85.40
Brokerage firm	86.00	85.50
Brokerage firm	85.85	85.55
Brokerage firm	85.85	85.65

 

 

 

 

 

 

 

 

 

(Sourabh Kumar and Pratiksha)

 

End

 

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

 

Edited by Ashish Shirke

 

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