India Rupee Review
Sees worst fall in 3 months on risk aversion, recession fear
This story was originally published at 17:22 IST on 7 April 2025
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By Gowri Lakshmi
MUMBAI – The rupee posted its biggest single day fall in nearly three months against the dollar on Monday, mirroring sharp losses in the domestic equities, as investors' risk appetite took a beating owing to rising fears of a recession and global trade war after US President Donald Trump's sweeping tariff policy, dealers said.
"Today's (Monday) market volatility is largely due to the condition in US stock market. Safe haven (currencies) are picking while EM (emerging markets) currencies will remain under pressure for sometime as we saw today," a dealer at a state-owned bank said.
The rupee depreciated 0.7% against the dollar and settled at 85.8350, its lowest closing level since Mar. 21. The Indian unit moved in a range of over 33 paise during the day. Most other Asian currencies tumbled 0.4-1.0% against the greenback. The Indonesian rupiah was the worst hit, with a fall of 1.0%.
The rupee opened sharply lower against the greenback at 85.7400 a dollar, tracking a fall in its regional peers, as investors mulled over the impact of China's latest retaliatory tariff of 34% against all imports from the US, triggering fear of a full-fledged global trade war. Most Asian currencies and stock markets sank on Monday. The Chinese yuan fell 0.4% against the US unit.
The rupee came under further pressure as banks purchased dollars on behalf of foreign portfolio investors, who looked to exit the domestic stock market, dealers said. The benchmark equity indices, the Nifty 50 and the BSE Sensex, ended 3.2% and 3.0% lower, respectively. After overseas investors net bought $3.8 billion from Indian financial markets in March, the current weak risk sentiment prompted them to pull out funds from emerging market economies.
The rupee was also weighed down as banks rushed to buy dollars on behalf of importers, who feared a further fall in the Indian unit, dealers said. "In the near term, the rupee is expected to depreciate after all the gains it logged since few weeks. It's majorly tracking the yuan and the market absorbed all the inflows due to the risk-off mood (of investors)," another dealer at a state-owned bank said.
The dollar index, too, recovered slightly on Monday after data released Friday showed a strong and resilient labour market in the US. The non-farm payrolls rose 228,000 last month, against the forecast of a 140,000 increase in a Dow Jones poll. The unemployment rate stood at 4.2%, compared with the forecast of 4.1%.
At 1530 IST, the dollar index, which measures the strength in the dollar against a basket of six major currencies, was at 102.78, compared with 102.89 on Friday and 101.94 on Thursday.
Some banks also bought the greenback on behalf of Indian corporates, who wanted to place long dollar positions, as they expect the Indian unit to depreciate further in coming days, which weighed on the rupee, dealers said. In the last few weeks, most traders had trimmed their existing long dollar positions due to sustained weakness in the dollar index and a sharp rise in the rupee.
However, losses in the Indian unit were capped as banks sold dollars on behalf of exporters, who wanted to take advantage of the relatively higher dollar/rupee levels, dealers said. Exporters sold dollars significantly since morning, which prevented the rupee from inching to the psycologically-crucial level of 86-per-dollar, dealers said.
According to some dealers, some foreign banks, including a Japan-based bank, also sold dollars for foreign-fund inflows likely into some Indian companies, which provided a cushion to the domestic currency. Earlier in the day, some media reports suggested that Japan's MUFG Bank is set to buy stake in YES Bank at valuation of $6.5 billion-$7 billion.
Market pariticipants are now waiting for the Reserve Bank of India's Monetary Policy Committee decision due Wednesday. An Informist poll of 15 economists expects the rate-setting panel to lower the repo rate by 25 basis points to 6.00%.
| AT 1530 IST | AT 0900 IST | HIGH | LOW | PREVIOUS (AT 1530 IST) | |
| Spot rupee per $1 | 85.8350 | 85.7400 | 85.5625 | 85.9000 | 85.2350 |
| 1-year dlr/rupee fwd (paise) | 204.06 | 203.56 | 206.70 | 201.92 | 198.94 |
FORWARDS
The premium on the one-year dollar/rupee forward contract ended at an 11-week high on Monday tracking a fall in the benchmark US Treasury yields, dealers said. The benchmark 10-year US Treasury yield fell on fears of recession amid the ongoing global uncertainty around trade. The premium on the one-year dollar/rupee forward contract rose over 7 basis points during the day to 2.41% on an annualised basis, the highest since Jan. 20.
A few dealers expect forward premiums to continue to rise as they see the US Treasury yields falling further. However, others said some banks are likely to sell forward dollars, taking advantage of a higher dollar/rupee forward premium, which may limit the rise in forward premiums.
At 1530 IST, the one-year forward premium was 204.06 paise against Friday's close of 198.94. On an annualised basis, the premium was 2.38%, up from Friday's close of 2.33%.
OUTLOOK
On Tuesday, the rupee will take cues from the movement in the dollar index and offshore Chinese yuan, dealers said. Dealers expect FPIs to continue exit the Indian financial markets amid the risk-off sentiment among investors, which may put some pressure on the rupee.
The local unit may also take cues from movement in crude oil prices, which have fallen sharply in the last two days, according to dealers. Market participants will keep a close watch on developments related to Trump's tariff policy.
After Monday's slump, some dealers expect the rupee to depreciate in the coming weeks as well, while some expect the rupee to appreciate or stabilise in the near-term despite the global uncertainties.
"Today's fall seems like a one odd day (happening). The rupee has been appreciating all this while and the dollar index is still in its weak side, so I think the rupee should hold the current levels or more," a currency trader at a private bank said.
During the day, the rupee is seen moving in a range of 85.60-86.10 against the dollar. Dealers see technical support for the Indian unit at 86.00 a dollar.
India Rupee - World FX: Euro up as Germany's exports rise more than expected
| AT 1450 IST | HIGH | LOW | PREVIOUS | |
| GBP/USD | 1.2855 | 1.2934 | 1.2835 | 1.2883 |
| EUR/USD | 1.0976 | 1.1050 | 1.0883 | 1.0958 |
| NZD/USD | 0.5555 | 0.5601 | 0.5521 | 0.5593 |
| AUD/USD | 0.5990 | 0.6061 | 0.5933 | 0.6040 |
| USD/JPY | 145.8410 | 146.8450 | 144.8290 | 146.9700 |
| USD/CAD | 1.4264 | 1.4269 | 1.4197 | 1.4226 |
| EUR/JPY | 160.0740 | 161.1818 | 158.3915 | 161.0700 |
| CHF/USD | 1.1739 | 1.1833 | 1.1610 | 1.1614 |
| EUR/CHF | 0.9349 | 0.9401 | 0.9313 | 0.9437 |
MUMBAI - The euro was up 0.3% against the US dollar Monday after Germany, European Union's largest economy, posted a higher-than-expected rise in its exports for February. Data showed Germany's exports rose by 1.8% in February, more than the forecast of a 1.5% rise in a Reuters poll. Germany's trade balance lodged a surplus of 17.7 billion euros in February, up from 16.2 billion in January.
However, gains in the euro were limited after Germany's industrical production declined more than expected in February. Output in the bloc's largest economy dropped by 1.3% against a forecast of a 0.8?ll in a Reuters poll.
Safe-haven currencies such as the Japanese yen and the Swiss franc continued to attract investors amid rising concerns over full-fledged trade war and expectations of weakening global growth. The Swiss franc jumped 1.1% against the greenback, while the yen was up by 0.5% against the dollar. The Bank of Japan warned against uncertainties over the country's economy as corporates fear their profits could be hit by the aggressive-than-expected US tariffs, limiting hopes of further interest rate hikes.
The Bank of Japan will meet for its next policy decision on Apr. 30-May. 1, with market participants widely expecting the central bank to maintain status quo on its benchmark lending rates.
The dollar index weakened in the ongoing European market session due to gains in other major global currencies. The index had risen in Asian trade after data released Friday showed US non-farm payrolls increased more-than-expected in March. The non-farm payrolls rose 228,000 last month, after an upwardly revised 117,000 in the month prior and against a forecast of 140,000 increase in a Dow Jones poll. However, the unemployment rate inched up to 4.2%, compared to 4.1?rlier.
At 1450 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 102.73, compared to 102.89 on Friday and 101.94 on Thursday.
Australian and New Zealand dollar fell 0.6% and 0.5% respectively, after China announced retaliatory tariffs of 34% on all imports from the US, starting Thursday. China's state council tariff commission stated that Washington's moves violated international trade rules. Any change in the Chinese economy directly impacts the currencies of Australia and New Zealand due to their close bilateral trade relations.
The pound sterling was down 0.2% against the greenback. Losses in the currency were limited after UK's Prime Minister Keir Starmer said he'll announce measures later this week to support the economy and businesses, which has been hit by the sweeping tariffs from Washington. "The world as we knew it has gone. We must rise to meet the moment," Starmer wrote in the Telegraph. "We stand ready to use industrial policy to help shelter British business from the storm."
The Canadian dollar was down 0.3% against the US unit as the commodity-linked currency was hit by the sharp fall in crude oil prices. Oil prices tanked on Friday after Beijing announced retaliatory measures, triggering fears of a recession that would reduce demand for crude amid an output hike by the Organisation of Petroleum Exporting Countries and its allies. (Gowri Lakshmi)
India Rupee: 1-yr fwd premium near 12-wk high as US yld dn on recession fear
| AT 1409 IST | AT 0900 IST | HIGH | LOW | PREVIOUS(AT 1530 IST) | |
| Spot rupee per $1 | 85.8725 | 85.7400 | 85.5625 | 85.8750 | 85.2350 |
| 1-year dlr/rupee fwd (paise) | 204.06 | 203.56 | 206.70 | 201.92 | 198.94 |
MUMBAI – The premium on the one-year dollar/rupee forward contract rose Monday to hit a near 12-week high, tracking a fall in the benchmark US Treasury yields, dealers said. The benchmark 10-year US Treasury yield fell on fears of recession amid the ongoing global uncertainty around trade.
"Forward premiums have just one cue right now and that is the US Treasury yield," a dealer with a state-owned bank said. "Ideally, premiums should have come down ahead of MPC (Monetary Policy Committee) outcome, but people are not really reacting to that."
The premium on the one-year dollar/rupee forward contract rose over 7 basis points to 2.41% on an annualised basis, the highest since Jan. 16. The benchmark 10-year US Treasury yield fell 5 bps on Friday, and remained on the downward path in European trade, falling another 5 bps. In the last one month, yield on the 10-year US Treasury note fell 35 basis points as of early european trading hours Monday. The one-year dollar/rupee forward premium rose over 25 bps during the same time.
A few dealers expect forward premiums to continue to rise as they see the US Treasury yields falling further. However, others said some banks are likely to sell forward dollars, taking advantage of a higher dollar/rupee forward premium, which may limit the rise in forward premiums. "I think the one-year forward premium can't go above 2.40%, there is a strong support there," a trader at a brokerage firm said. "Strong receiving could be seen at those level."
After hitting near a 12-week high, the one-year dollar/rupee forward premium came slightly down, and was trading at 2.38% at 1404 IST. It was 2.33% on Friday and 2.24% on Thursday. On an absolute basis, the premium was 204.06 paise against Friday's close of 198.94 paise and 191.05 paise Thursday. (Sourabh Kumar)
India Rupee: Sinks on constant importer dlr buys; risk-off sentiment weighs
| AT 1342 IST | AT 0900 IST | HIGH | LOW | PREVIOUS(AT 1530 IST) | |
| Spot rupee per $1 | 85.8075 | 85.7400 | 85.5625 | 85.8450 | 85.2350 |
MUMBAI – The rupee sank against the dollar as banks persistently purchased the greenback on behalf of importers, who feared that the Indian currency may fall even more, given the uncertain global trade scenario, dealers said. Importers rushed to stock up on dollars, fearing the potential global tariff war will further fuel the ongoing risk-off sentiment, dealers said.
"There has just been (dollar) buying since morning, and that has kept the pressure on the rupee," a dealer with a state-owned bank said. "There are a few foreign banks on higher levels."
Shortly after opening, importers quickly came into the market demanding the greenback, which further put pressure on the rupee, dealers said. Importers demanded dollars as they expect the rupee to come under more pressure in coming days, dealers said. After China retaliated to US tariffs with a fresh 34% tariff on import of US goods, investors turned more risk averse, anticipating a full fledged trade war between the world's two largest economies.
Apart from importers, a fall in domestic equities also weighed on the Indian rupee, dealers said. At 1332 IST, both the Nifty 50 and BSE Sensex were down more than 4%. Stock markets across Asia slumped Monday. Further, a fall in the Chinese yuan also kept the rupee under pressure, dealers said.
However, some foreign banks sold the greenback, which limited losses in the Indian currency, dealers said. "Some Japanese bank has sold today (Monday), probably for their investment," a dealer with a brokerage firm said. Media reports suggested that Japan's MUFG Bank is close to buy stake in YES Bank, with the bank being valued at $6.5 billion-$7 billion.
A fall in the dollar index also provided support to the Indian rupee, dealers said. The dollar index, which measures the strength in the greenback against a basket of six major currencies, was at 102.54 against 102.89 Friday and 101.94 Thursday.
For the rest of the day, the rupee is seen moving in a range of 85.40-85.90 a dollar. Dealers see immediate technical support for the Indian unit at 85.90 a dollar. (Sourabh Kumar)
India Rupee: Technical Levels for rupee - Apr 7
MUMBAI – At 1128 IST, the rupee was at 85.7100 per dollar. At 0900 IST, the rupee was at 85.7400 a dollar, against the previous close of 85.2350. 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 | 85.95 | 85.86 | 85.60 | 85.50 |
| Private bank | 86.15 | 85.85 | 85.40 | 85.20 |
| Brokerage firm | 86.20 | 86.00 | 85.10 | 85.00 |
(Gowri Lakshmi)
India Rupee - Asia FX:Plunge on low risk appetite amid global trade war fear
MUMBAI - Most Asian currencies traded sharply lower against the dollar Monday due to investors' risk-off sentiment amid rising concerns over a potential global trade war and consequently, a slowdown in growth. Further, the dollar index recovered Monday after the US non-farm payrolls increased more than expected in March. This is also weighed on Asian currencies.
The US non-farm payrolls rose 228,000 last month, after an upwardly revised 117,000 in the month prior, and against a forecast of 140,000 increase in a Dow Jones poll. However, the unemployment rate inched up to 4.2% compared to 4.1?rlier.
At 0946 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 102.95, compared to 102.89 on Friday and 101.94 on Thursday.
The Indonesian rupiah plummeted 1.5% against the US dollar amid risk-off sentiment. A senior economic minister on Sunday said Indonesia will not impose retaliatory measures as its first reponse against reciprocal tariffs by the US. Chief economic minister Airlangga Hartaro said in a statement that the country would first pursue diplomatic talks and negotiations to find mutually beneficial solutions.
The Philippines' peso was down 0.8% against the greenback tracking losses in domestic equities. Early Monday, the benchmark index, PSEI index was down 4.2%. The Philippines' central bank is likely to lower its benchmark lending rates by 25 basis points Thursday amid slowing inflation and concerns over economic growth, which further weighed on the Philippines' currency. The Thai baht was down 0.5% following losses in the domestic stock market. The Thai Set Index was down 3.2% on Monday.
The Malaysian ringgit was down 0.7% as the benchmark index, Bursa Malaysia, fell 5.4?rly Monday. Meanwhile, Bank Negara Malaysia governor said the central bank is closely watching developments and negotiations with the US. "There is still room for negotiation, and we do not yet know the full extent, timing, or magnitude of the tariff, nor which scope of coverage and which products will be affected by the tariff," he said.
The Chinese yuan was down 0.4% against the greenback after its domestic stock indices slumped. Shanghai Composite Index fell 6.3%, while the Hong Kong's Hang Seng was down over 10%. Beijing announced Friday retaliatory tariffs of 34% on all imports from the US starting Thursday. The state council tariff commission stated that Washington's moves violated international trade rules.
The Taiwan dollar was down 0.5% against the greenback. Taiwan's top financial regulator on Sunday said it will impose temporary curbs on short selling of shares to mitigate potential market turmoil due to reciprocal tariffs announced by the US. The finacial supervisory commission raised the minimum short selling margin ratio to 130% from 90%, beginning Monday till Friday.
The South Korean won was down 0.2% against the US unit after data released Monday showed the composite coincident index of the country, a key indicator of South Korea's economy, stood at 98.4 in January, hitting the lowest level in three years. (Gowri Lakshmi)
India Rupee: Plummets on low risk appetite; exporters' dlr sales limit loss
| AT 0908 IST | AT 0900 IST | HIGH | LOW | PREVIOUS(AT 1530 IST) | |
| Spot rupee per $1 | 85.7230 | 85.7400 | 85.7050 | 85.7400 | 85.2350 |
MUMBAI – The rupee plummeted against the US dollar on Monday as investors' risk appetite took a hit amid fears of a global trade war, dealers said. A slight recovery in the dollar index also kept the Indian unit under pressure, they said. The Chinese yuan fell on Monday, which weighed on the Indian currency, dealers said.
"The rupee market seems to be a bit volatile today (Monday). The rupee opened sharply down tracking CNY (Chinese yuan) and other Asian currencies," a dealer at a state-owned bank said.
The rupee opened over 50 paise lower than its previous close as investors turned risk-averse amid fears of a trade war, which could hit global growth, dealers said. Currencies, along with stock markets, tumbled across Asia. The Chinese yuan was down 0.4% against the greenback. At 0915 IST, the Shanghai Composite Index was down 6.3%. The Hang Seng slumped over 10% on Monday. Other Asian currencies fell between 0.3% and 1.2% against the greenback amid rising worries about global growth and recession, dealers said.
A slight recovery in the dollar index also put the rupee under pressure, dealers said. The index recovered after data on Friday showed stronger-than-expected US non-farm payrolls data, suggesting a strong and stable labour market in the world's largest economy. The non-farm payrolls rose 228,000 last month, against the forecast of a 140,000 increase in a Dow Jones poll. The unemployment rate stood at 4.2%, compred to the forecast of 4.1%.
At 0930 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 102.94, compared to 102.89 on Friday and 101.94 on Thursday.
Some banks also purchased the greenback, likely on behalf of importers, fearing further fall in the rupee, which put the rupee under further pressure, dealers said. However, noting the sharp fall in the Indian unit, some banks sold dollars on behalf of exporters to take advantage of the relatively higher dollar/rupee levels, dealers said. This is likely to have limited the fall in the Indian unit, dealers said.
The Reserve Bank of India's Monetary Policy Committee will begin its meeting Monday. The rate-setting panel is widely expected to deliver a cut of 25 basis points in the repo rate on Wednesday.
For the rest of the day, the rupee is seen moving in a range of 85.40-85.90 a dollar. Dealers see immediate technical support for the Indian unit at 85.80 a dollar. (Gowri Lakshmi)
India Rupee: Expected range for rupee - Apr 7
MUMBAI – Following are the expected support and resistance levels for the rupee on Monday, as forecast by leading banks and brokerages in an Informist poll:
| PARTICIPANT | SUPPORT | RESISTANCE |
| State-owned bank | 85.90 | 85.70 |
| Foreign bank | 86.00 | 85.25 |
| Brokerage firm | 86.00 | 85.50 |
| Brokerage firm | 85.90 | 85.20 |
(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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