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Informist, Tuesday, Apr. 15, 2025

By Gowri Lakshmi

MUMBAI – The rupee ended sharply higher against the dollar Tuesday due to sustained weakness in the dollar index, dealers said. The rupee received further support during the day as some banks sold the greenback for foreign-fund inflows and exporters, they said. However, gains in the Indian currency were limited as importers purchased the US currency to take advantage of relatively lower dollar/rupee levels, dealers said. 

After moving in a range of nearly 30 paise, the rupee ended the day at 85.7725 against the greenback, higher than the previous close of 86.0400 a dollar. The rupee rose to 85.5800 against the dollar in early trade, the highest since Apr. 7. 

The rupee was the second best performer against the greenback on Tuesday, after the Philippines peso. Other Asian currencies moved on a mixed note as investors continued to assess the impact of the ongoing trade uncertainties.

The rupee opened at 85.8750 against the dollar, 17 paise higher compared with its previous close, as the dollar remained weak against major global currencies, dealers said. The dollar index was broadly unchanged on Tuesday from Monday's levels as investors assessed the impact of the shift in trade and tariff policies by the US and the uncertainties around it, dealers said. 

"The dollar has been on decline for few weeks continuously now. Traders and investors have lost optimism about the US dollar and its safe-haven status is being challenged. This will remain for some time...the whole change in geopolitical front is something like never before," a currency trader at a brokerage firm said. 

At 1530 IST, the dollar index, which measures the strength in the dollar against a basket of six major currencies, was at 99.65, slightly up from 99.64 Monday and 99.78 Friday. The index fell to 99.01, the lowest level since April 2022. 

Shortly after the domestic spot market opened, some traders trimmed their existing long dollar positions owing to the continued weakness in the dollar, dealers said. This led to stop-losses being triggered on short dollar bets at multiple dollar/rupee levels and helped the rupee hit an over two-week high of 85.5800 against the dollar. 

Noting the sharp rise in the Indian unit, banks rushed to purchase the greenback on behalf of importers at multiple levels to take advantage of the relatively lower and attractive dollar/rupee levels. Some dealers speculated that the Reserve Bank of India stepped in to purchase dollars when the rupee traded at around 85.60-85.70 to shore up its foreign exchange reserves which limited the rise in the Indian unit.

However, the rupee continued to receive support as few foreign banks, including a UK-based and a US-based bank, sold dollars for foreign fund inflows likley into the Indian equity market, dealers said. Both Nifty 50 and the BSE Sensex ended in the green Tuesday, up 2.2% and 2.1%, respectively.

Further, some exporters also sold dollars as soon as the rupee rose above the key level of 85.80-85.70 a dollar, on expectation that the Indian currency may rise further in the near term, dealers said. "Exporters were in the panic mode today, they kept seeing the levels rise and breach some key levels, including stop-loss being triggered," a dealer at a state-owned bank said. 

Data released during market hours showed India's merchandise trade deficit widened to $21.54 billion in March from a 42-month low of $14.05 billion in February due to a sharp rise in imports. This weighed on the Indian currency, according to dealers. 

FORWARDS

The one-year dollar/rupee forward premium ended lower Tuesday as banks sold dollars for forward delivery on expectations that US Treasury yields may rise going ahead amid uncertainty around US tariff policies, dealers said. While President Donald Trump announced an exemption for multiple electronic items from reciprocal tariffs, he also said semiconductor imports may attract tariffs in the days to come. 

The US Treasury yield fell Monday, which limited the downward movement in forward premiums, dealers said. Volatile movement in US Treasury yields in the recent past have kept traders on the edge, making it tough to predict future movement in dollar/rupee forward premiums. Forwards of a currency pair are reflective of the interest rate differential between the two countries. 

At 1530 IST, the one-year exact period forward premium was 2.18%, on an annualised basis, against 2.22% Friday. On an absolute basis, the premium was 187.16 paise, down from Friday's close of 190.88 paise. 

OUTLOOK 

On Wednesday, the rupee will take cues from the movement in the dollar index and the Chinese yuan. Dealers expect foreign banks to continue to sell dollars for foreign fund inflows, likely into the domestic stock market and government bond market. They also expect traders to trim their existing long dollar positions if the dollar continues to fall amid ongoing tariff uncertainties, aiding the Indian unit. 

Dealers expect the RBI to intervene through dollar purchases if the rupee rises sharply. Market participants will also closely watch the developments in the geopolitical front and any updates from the White House on tariff policies.  

During the day, the rupee is seen moving in a range of 85.60-86.10 against the dollar. Dealers see technical resistance for the Indian unit at 85.50 a dollar.

India Rupee - World FX: Sterling up as UK labour mkt conditions improve

MUMBAI – The pound sterling was up 0.3% against the dollar as data on employment in the UK for the three months ended February showed the economy added 206,000 fresh workers, significantly higher than the 144,000 recorded in the three months ended January, FX Street reported.

For fresh cues on interest rates, the focus will be on UK CPI data for March, which will be released on Wednesday. Economists expect the UK core CPI – which excludes volatile food and energy prices – to have grown at a steady pace of 3.5%, according to a poll by FX Street. 

The Australian dollar was up 0.3% against the US dollar on Tuesday. The Reserve Bank of Autsralia's policymakers expressed caution due to the ongoing tariff policies from the US and the uncertainties around it, according to the minutes of the March monetary policy meeting, published earlier in the day. 

"Members judged that it was not appropriate at this stage for monetary policy to react to the potential risks that could move outcomes in either direction," the minutes said. They showed central bank policymakers were uncertain about the timing of the next interest rate cut. In March, the Reserve Bank of Australia had kept its benchmark lending rates unchanged at 4.1%, as widely anticipated. 

Tracking gains in the Australian currency, the New Zealand dollar was up 0.5% against the greenback. Any change in the Australian economy directly impacts the New Zealand currency due to their close bilateral trade relations. New Zealand exports a wide variety of products to Australia, including diary prodcuts, meat and machinery. 

The Japanese yen was up 0.2% against the US dollar. The Bank of Japan is likely to pause its interest rate hikes in the near term due to uncertainties pertaining to the US tariff measures, a former Bank of Japan official said. "They will be in a wait-and-see mode for a while. We don't know if it's really a 90-day pause, but the BoJ probably wants to see how the talks will proceed with US," Bank of Japan's former executive director Kenzo Yamamoto said. Last week, the Japanese yen appreciated sharply to hit a six-month high against the greenback. 

The Swiss franc was up 0.1% against the greenback due to safe-haven inflows and sustained weakness in the dollar index. The index remained broadly unchanged from Friday's levels as investors continue to assess the impact of the tariff announcements by the US. 

On Sunday, US President Donald Trump announced exemptions for certain goods from the reciprocal tariffs announced earlier. The Trump administration granted exemptions to smartphones, computers and other electronics imported from China and other countries. However Trump's commerce secretary Howard Lutnick earlier on Sunday said critical technology products from China might face separate new tariffs along with semiconductors in the next two months. 

At 1501 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.65, marginally higher than 99.64 on Monday and 99.78 on Friday. The dollar index hit an over three-year low of 99.01 and slipped below 100 on Friday for the first time since Jul. 19, 2023.

The euro traded flat against the greenback. Data on Tuesday showed that the ZEW indicator of Economic Sentiment for the Eurozone declined to -18.5 in April, the lowest level since December 2022. 

The Canadian dollar was up 0.1% after Trump announced some relief from the 25% tariff imposed on automobile parts from Canada, Mexico and other trading partners. Speaking on Monday at the White House, Trump said he was considering a modification the tariffs and said car companies "need a little bit of time because they're going to make 'em here".  (Gowri Lakshmi)

India Rupee: Off highs on importers' dlr purchases; FX inflows give support

MUMBAI – The rupee came off the day's high as banks purchased dollars on behalf of importers, taking advantage of relatively lower dollar-rupee levels, dealers said. The rupee was supported as some foreign banks sold dollars for foreign fund inflows, dealers said. The rupee had hit a week's high of 85.5800 a dollar Tuesday, within the first hour of trade.

The rupee rose sharply due to a relatively weaker dollar index, dealers said. "Importer buying is an everyday thing, no matter what levels, some importer activities are always present in the market," a currency trader at a brokerage firm said. "But now since the rupee has breached some key levels, the demand for dollars just sharply rose."

The dollar index was relatively lower as investors remained focused on other safe haven assets amid the ongoing global trade uncertainties spurred by the US announcing tariffs on its trading partners. The dollar has weakened sharply against other safe-haven currencies, hitting a decade's low against the Swiss franc and a multi-month low against the Japanese yen last week.

At 1353 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.57, up from 99.64 Monday and 99.78 Friday. The dollar index hit an over three-year low of 99.01 on Friday. It also slipped below 100 on Friday for the first time since Jul. 19, 2023.

Some dealers speculated that the Reserve Bank of India stepped in to purchase dollars when the rupee was at 85.60-85.70 a dollar, which may have also capped gains in the rupee. Dealers said the RBI might have purchased the greenback to shore up its foreign exchange reserves. So far in the day, the Indian currency moved in a range of nearly 30 paise.

But the rupee remained sharply higher against the greenback, as exporters persistently sold dollars, dealers said. "Once the rupee breached 85.80 (a dollar Tuesday), exporters panicked (and) some of them sold their dollars," a dealer at a brokerage firm said.

A few foreign banks, including a UK- and US-based one, also sold dollars for foreign-fund inflows, likely into the domestic stock market, dealers said. At 1258 IST, the benchmark indices, the Nifty 50 and the BSE Sensex, were up 2.2% each.

For the rest of the day, the rupee is seen moving between 85.55 and 85.85 a dollar. Dealers see immediate technical resistance for the Indian unit at 85.55 a dollar. (Gowri Lakshmi)

India Rupee: Technical Levels for rupee - Apr 15

MUMBAI – At 1005 IST, the rupee was at 85.6475 per dollar. At 0900 IST, the rupee was at 85.8750 a dollar, against the previous close of 86.0400. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Sourabh Kumar and Gowri Lakshmi)

India Rupee: Sharply higher due to weak dollar index; stop-losses hit

MUMBAI – The rupee rose sharply against the dollar Tuesday due to sustained weakness in the dollar index, dealers said. The rupee also got a boost as traders trimmed their existing long dollar positions, triggering stop-losses at multiple dollar/rupee levels, dealers said. The rupee rose to a high of 85.6300 a dollar in early trade.

"The sharp rise in levels from the opening is as traders trimmed their (long dollar) positions. The rupee opened higher due to dollar weakness, which is being reflected after the long weekend," a currency trader at a state-owned bank said.

The rupee rose sharply to 85.8750 against the greenback from 86.04 Friday as the dollar index remained weak due to the ongoing tariff war and uncertainties around it. In the latest twist to the tariff war, US President Donald Trump exempted imports of smartphones, computers, and several other electronics from reciprocal tariffs. At 0935 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.72, up from 99.64 Monday but down from 99.78 Friday.

The rise of the domestic currency was limited as banks bought dollars for importers, who wanted to take advantage of the relatively lower dollar/rupee levels, dealers said. "It is a buy on dips markets, importers who could not hedge during the sudden uptick from 86.40 to 85 levels are the ones actively buying today (Tuesday)," a dealer at a brokerage firm said.

During the day, the rupee is seen moving between 85.50 and 85.95 a dollar. Dealers see immediate technical resistance for the Indian unit at 85.55 a dollar. (Gowri Lakshmi)

India Rupee: Expected range for rupee - Apr 15

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 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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