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Informist, Tuesday, Apr. 8, 2025

By Gowri Lakshmi

MUMBAI – The rupee breached the psychologically crucial level of 86 per dollar Tuesday as importers persistently bought dollars fearing a further fall in the Indian unit, dealers said. However, some banks sold dollars on behalf of foreign portfolio investors and exporters, which limited the rupee's fall, dealers said. 

"86 (a dollar) was bound to happen sooner the way with which uncertainties have been growing," a dealer at a private bank said. "Importers were in a panic mode since yesterday (Monday) and it came pouring down further today (Tuesday)."

After falling to a low of 86.2925 against the greenback, the Indian unit settled at 86.2650 a dollar, the lowest level since Mar. 21, compared to its previous close of 85.8350. The Indian unit fell over 48 paise during the day amid a lower-than-usual volume in the currency market, dealers said. 

Most other Asian currencies also depreciated against the greenback on Tuesday. Barring the Taiwan dollar and the Philippines peso, other Asian currencies fell between 0.2-0.6%, with the South Korean won being the worst hit.

The rupee started the day slightly lower against the dollar at 85.8850 as importers rushed to purchase dollars as soon as the market opened due to rising uncertainties on account of the reciprocal tariffs imposed by the US. The rupee also came under pressure tracking a fall in regional currencies as investors assessed the impact of a potential global trade war after US President Donald Trump said he would impose an additional 50% duty on China if it did not rescind its 34% retaliatory tariffs on imports from the US.

Monday, the Indian unit had posted its biggest single-day loss since January, falling 60 paise, as the risk appetite of investors took a hit due to concerns over a US recession and a global economic slowdown. The rupee has fallen 0.9% against the US unit since Apr. 2 when Trump's reciprocal tariffs came into effect. 

Noting the sharp fall in the Indian unit, some exporters stepped in with dollar sales to take advantage of the relatively higher dollar/rupee levels, dealers said. However, most exporters sold dollars only after the Indian unit fell past 86 a dollar, and this limited a further fall in the domestic currency, they said.

"Big figure (86 a dollar) was something the exporters were keenly looking forward to. After all the appreciation in recent weeks, they are back in action," a currency trader at a state-owned bank said.

The rupee received further support as some foreign banks sold dollars on behalf of foreign portfolio investors, who were looking to invest in the domestic stock market, dealers said. Benchmark indices, the Nifty 50 and the BSE Sensex ended in the green, up 1.7% and 1.5%, respectively. 

However, dollar sales by exporters and foreign-fund inflows could not prevent the rupee from falling sharply, as importers purchased dollars continuously. "It has become a buy on dips (fall in rupee) market again, importers were practically rushing at every level," a dealer at a brokerage said.

Despite the indices ending higher, dealers said a few overseas investors also exited the Indian equities market, which put pressure on the rupee, dragging it to a low of 86.2925. 

The dollar index declined slightly on Tuesday as the dollar lost some of its safe-haven sheen and investors moved to other safe-haven currencies. As a result, the Japanese yen rose 0.6% and the Swiss franc rose 0.5%. At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies was at 103.18, down from 103.47 Monday, but still up from 102.89 on Friday. 

Market participants are now waiting for the Reserve Bank of India's Monetary Policy Committee's rate decision on Wednesday. An Informist poll of 15 economists expects the rate-setting panel to lower the repo rate by 25 basis points to 6.00%.

FORWARDS 

The premium on the one-year dollar/rupee forward fell as banks sold the greenback for forward delivery on expectations that the rate-setting panel of the RBI will lower the repo rate by 25 basis points, dealers said.  

Forward premiums on most tenors also fell Tuesday due to a rise in the benchmark 10-year US Treasury yield, dealers said. The yield on the 10-year US Treasury note closed 14 bps lower Monday. However, the premium on the one-month forward contract was up Tuesday due to a sharp fall in the rupee in the spot market, which led to some importers purchasing forward dollars for near-term maturity, dealers said.

At 1530 IST, the premium on the one-year exact period forward contract ended at 198.61 paise, down from 204.06 paise Monday and 198.94 paise Friday. On an annualised basis, the premium ended at 2.29%, down from 2.38% Monday and 2.33% Friday.

OUTLOOK 

On Wednesday, the rupee will take cues from the movement in the dollar index and the offshore Chinese yuan, dealers said. Dealers said the currency market may remain relatively calm during the Asian market session as traders may refrain from placing large bets ahead of the policy announcement by the RBI. 

"25 bps is priced in the market, so the rupee is less likely to be affected by a cut. And I see no chance of a status quo, but in case (there is no rate cut) we can expect some appreciation (in rupee) in the near-term," a dealer at a private bank said. 

Dealers expect importers to continue purchasing dollars which may put the rupee under pressure. However, they expect the RBI to step in with dollar sales if the Indian unit comes under immense pressure. The rupee may receive some support from foreign fund inflows into government bonds and the Indian stock market, dealers said. 

During the day, the rupee is seen moving in a range of 86.00-86.40 against the dollar. Dealers see technical support for the Indian unit at 86.30 a dollar.

India Rupee - World FX:Australian dollar jumps as China unveils new stimulus

India Rupee - World FX: Australian dollar jumps as China unveils new stimulus

MUMBAI – The Australian dollar on Tuesday jumped over 1.2% against the US dollar after China unveiled new measures as part of its economic stimulus plan to mitigate the impact of recent stock market rout. The People's Bank of China said early Tuesday that it will provide support to a sovereign fund as and when needed to support its decision to buy more stock. 

On Monday, China's state-owned funds planned to buy their domestic stocks amid an escalating tariff war with the US. China Reform Holding Corp. said it will spend $10.9 billion to increase holdings of shares in state-owned enterprises and technology firms, Bloomberg reported. However, gains in the Australian currency were limited after Australia's consumer sentiment fell to a six-month low in early April amid rising concern over global economic growth. Data published Tuesday showed the Westpac-Melbourne Institute consumer sentiment index declined 6% in April to 90.1 from 95.9 a month ago. 

Tracking gains in the Australian dollar, the New Zealand dollar rose sharply by 1.0% against the greenback. Any change in the Australian economy directly impacts the New Zealand dollar due to their close bilateral trade reltions. Market participants await the monetary policy decision by the Reserve Bank of New Zealand due Wednesday, where the central bank is widely expected to lower its official cash rate by 25 basis poits to 3.5%. 

The dollar index continued to wallow as investors continued to prefer other safe haven assets such as the Japanese yen and Swiss franc, amid ongoing concern over impact of the tariffs and a likely recession in the world's largest economy. In the latest development, China refused to accept what it calls a 'blackmail' from the US as US President Donald Trump threatened to impose additional 50% tariff on Beijing following the latter's retaliatory measures last week. 

"The US side's threat to escalate tariffs against China is a mistake on top of a mistake, once again exposing the American side's blackmailing nature," China's commerce ministry said. "If the US insists on having its way, China will fight to the end." 

"All talks with China concerning their requested meetings with us will be terminated! Negotiations with other countries, which have also requested meetings, will begin taking place immediately," Trump said on Monday in a post on Truth Social. 

At 1444 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 103.25, compared to 103.47 on Monday and 102.89 on Friday. The Japanese yen was up 0.5% while the Swiss franc was up 0.1% against the greenback as investors shifted to these safe-haven currencies. 

The euro was up 0.2% against the greenback. The European Union, in response to the reciprocal tariffs, proposed to cut tariffs on all industrial goods from the US. However, speaking at the White House on Monday, Trump rejected the proposal and the said the offer from the bloc was not enough to reset the bilateral trade relationship and accused the bloc of maintaining non-tariff trade barriers. Meanwhile, the pound sterling remained steady against the US unit.  (Gowri Lakshmi)

India Rupee: Premium falls on banks' fwd dlr sales before MPC decision Wed

MUMBAI – The premium on the one-year dollar/rupee forward contract fell as banks sold the greenback for forward delivery, ahead of the Reserve Bank of India's Monetary Policy Committee's rate decision, due Wednesday, dealers said.

"People are receiving since morning, and that is largely because of the expectation of a 25-bps cut tomorrow (Wednesday)," a dealer with a state-owned bank said. "UST has risen overnight, which also impacted premiums."

As per an Informist poll of 15 economists, the MPC is expected to slash the repo rate by 25 basis points to 6.00% on Wednesday. Dealers see the chances of a 25-bps rate cut, and hence expect very slight change in forward premium. However, "if there is a rate cut and the change in stance, I think premium may fall to about 2.20%," a dealer with another state-owned bank said.

At 1400 IST, the premium on the one-year exact period forward contract was 199.81 paise against Monday's close of 204.06 paise and Friday's close of 198.94 paise. On an annualised basis, the premium was 2.31% against Monday's 2.38% and Friday's 2.33%.

Forward premiums on most tenors also fell Tuesday due to a rise in the benchmark 10-year US Treasury yield, dealers said. The yield on the 10-year US Treasury note closed 14 paise lower Monday. Forwards of a currency pair are reflective of the interst rate differential between the two countries.

However, the premium on the one-month forward contract was up Tuesday due to a sharp fall in the rupee in the spot market, which led to some importers purchasing forward dollars for near-term maturity, dealers said.  (Sourabh Kumar)

India Rupee: Sharply dn, breaches 86/$ on importers' persistent dollar buys

MUMBAI – The rupee was sharply down, breaching the 86 a dollar mark, as banks persistently purchased dollars on behalf of importers, who were wary of a further fall in the Indian unit amid rising worries over impact of ongoing tariff wars, dealers said. However, some foreign banks sold the greenback on behalf of foreign portfolio investors, which limited losses in the Indian unit, dealers said. 

"Importers are mostly in a panic situation now, hence the dollar demand. But some inflows are seen into equities, especially after yesterday's (Monday) sell-off which is giving some support for the rupee," a currency trader at a private bank said. So far, the rupee fell to a low of 86.0625 a dollar. 

On Monday, US President Donald Trump threatened China with an additional 50% tariff, starting Wednesday, over the reciprocal tariffs after Bejiing last week announced retaliatory measures. This raised worries over a larger trade war and a potential slowdown in global economic growth.

Noting a sharp fall in the Indian unit, some exporters sold dollars, to take advantage of the relatively higher dollar/rupee levels, dealers said. This limited the fall in the domestic currency, dealers said. Further, losses in the currency were also capped as some foreign banks sold the greenback on behalf of overseas investors, looking to invest in the domestic stock market, dealers said. At 1235 IST, benchmark equity indices Nifty 50 and BSE Sensex traded 2.2% higher each. 

Dealers said overall volumes in the currency market were lower than usual as traders refrained from placing large dollar bets ahead of the rate-decision by the Monetary Policy Committee of the Reserve Bank of India, 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%.

For the rest of the day, the rupee is seen moving in a range of 85.75-86.10 a dollar. Dealers see immediate technical support for the Indian unit at 86.10 a dollar. (Gowri Lakshmi)

India Rupee: Technical Levels for rupee - Apr 8

MUMBAI – At 1028 IST, the rupee was at 85.8750 per dollar. At 0900 IST, the rupee was at 85.8850 a dollar, against the previous close of 85.8350. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Gowri Lakshmi and Sourabh Kumar)

India Rupee: Tad down as importers buy dollars, sales by some exporters aid

MUMBAI – The rupee was slightly lower against the dollar as banks purchased the greenback on behalf of importers, dealers said. Soon after open, the rupee came under immense pressure, as importers demanded the greenback, wary of further fall in the rupee, dealers said. The rupee fell to a low of 85.9400 against the greenback within minutes of opening.

However, noting the fall in the Indian unit, some exporters sold dollars, which limited the fall in the rupee, dealers said. "The market is correcting itself now, the tariff impact is slowly setting in and importers are in a panic situation now," a currency trader at a private bank said. "But market won't be as volatile as it was yesterday... it will likely be calm ahead of MPC (Monetary Policy Committee)." 

Some dealers speculated that the Reserve Bank of India might have stepped in with dollar sales, likely to prevent the rupee from inching towards 86 per dollar. "While (exporters) may have booked profits, most exporters are in wait and watch mode, they are expecting big figure (86 a dollar) to break. This could possibly be an intervention from RBI to bring levels down," another dealer at a private bank said. 

The rupee recieved support due to a fall in the dollar index. Investors moved to stock up other safe-haven assets such as the Japanese yen and Swiss franc amid ongoing worries about a trade war and its impact on global economic growth. At 0825 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 103.00, compared with 103.47 on Monday and 102.89 on Friday.

Investors assessed the potential of a full fledged trade war after Trump said he would impose additional 50% duty on Wednesday, in response to China's 34% retaliatory tariffs on all imports from the US. "For now, the market seems calm. During the day, the market may react sharply to any tariff-related news especially from China," a dealer at a state-owned bank said. China said on Tuesday that it would retaliate, should the US choose to go ahead with its plans of imposing additional tariffs.

Market pariticipants are now waiting for the Reserve Bank of India's Monetary Policy Committee's rate decision on Wednesday. An Informist poll of 15 economists expects the rate-setting panel to lower the repo rate by 25 basis points to 6.00%.

During the day, the rupee is seen moving in a range of 85.70-86.00 a dollar. Dealers see immediate technical support for the Indian unit at 86.00 a dollar. (Gowri Lakshmi)

India Rupee - Asia FX: Mixed; investors weigh latest US-China tariff threats

MUMBAI – Asian currencies traded on a mixed note against the dollar on Tuesday as investors assessed the impact of the latest US-China tariff threats. US President Donald Trump's threat to increase import tariffs on China and the European Union for their retaliatory measures has led to increased chances of a full-fledged trade war.

Trump said he would impose additional 50% duty in response to China's 34% retaliatory tariffs on all imports from the US. "Additionally, all talks with China concerning their requested meetings with us will be terminated! Negotiations with other countries, which have also requested meetings, will begin taking place immediately," Trump said in a post on Truth Social. Meanwhile, the European Union proposed counter tariffs of 25% on a range of goods from the US, Reuters reported. 

Chinese embassy spokesperson Liu Pengyu called Trump's move a "typical move of unilateralism, protectionism and economic bullying". "We have stressed more than once that pressuring or threatening China is not a right way to engage with us," he added. "China will firmly safeguard its legitimate rights and interests." The Chinese yuan traded 0.7% lower against the greenback in early trade on Tuesday.

The dollar index declined Tuesday amid ongoing worries about a trade war and its impact on global economic growth. At 0825 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 102.88, compared with 103.47 on Monday and 102.89 on Friday. 

The Malaysian ringgit was down 0.1% as the country prepares itself for the possibility of a lasting impact of tariffs on its economy. The Malaysian government is taking several measures to address the impact, the country's minister of investment, trade and industry, Zafrul Aziz, said. Aziz is expected to meet his US counterparts by April-end. 

The Taiwan dollar was up 0.3% against the greenback after Taiwan's President Lai Ching-te announced Monday a five-pronged strategy to address the US tariffs, calling for calm and unity coupled with negotiations and support for domestic industries and long-term economic planning. Taiwan was subject to 32% import duty by the US. Taiwan's central bank on Monday said it would intervene as and when required to ensure the stability of the currency and said it had "sufficient ability" to deal with fluctuations.

The Indonesian rupiah was down 0.1% against the greenback as investors turned risk-averse amid global trade uncertainty. Indonesia's central bank on Monday said it would 'intervene aggressively' in the domestic foreign exchange market as markets in Indonesia resume trade on Tuesday for the first time since US tariffs were announced. Financial markets in Indonesia were shut from Mar. 28 to Apr. 7 on account of Id-ul-Fitr. 

The Philippines' peso was up 0.4% against the US dollar on expectations of easing of trade relations between Philippines and the US after the Asian nation's trade secretary, Cristina Roque, said they are considering and ready to lower tariffs on US imports in response to the reciprocal tariffs imposed by Washington. Manila was hit by 17% tariff on its exports to the US. Roque said government officials would meet soon to consider the range of products to reduce tariffs on. 

The South Korean won was up 0.3% on expectations of trade talks with the US. Bank of Korea Deputy Governor Ryoo Sang-dai warned that the South Korean markets could face prolonged and heightened volatility due to the tariffs imposed by US President Trump. On Monday, the central bank called for a prompt implementation of market stabilisation measures when necessary. The US imposed 25% tariff on South Korea's exports to the US. 

The Thai baht was up 0.3% against the US currency amid ongoing efforts to mitigate the impact of the tariffs. The country seeks to import more goods and ramp up US investments. The country will also seek to collaborate with top agricultural states in the US to import more commodities, said Supavad Saicheua, a member of the prime minister's economic advisory panel. Thailand may also step up imports of natural gas from a planned Alaska pipeline, he added.  (Gowri Lakshmi)

India Rupee: Expected range for rupee - Apr 8

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, Pratiksha, and Gowri Lakshmi)

End

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

Edited by Saji George Titus

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