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Informist, Monday, Apr. 21, 2025

By Gowri Lakshmi

MUMBAI – The rupee ended at a near-four-month high Monday as the dollar index continued to be weak and foreign fund inflows picked up, dealers said. The Indian currency was strong as some exporters sold dollars, they said. However, the rupee's gains were capped after a few importers rushed to purchase the greenback after it weakened against the local unit, dealers said. 

"Some importers purchased dollars, but most waited. Some exporters also sold in panic while others have entered their wait-and-watch mode," a currency trader at a private sector bank said. "The rupee received much of its support from the dollar weakness and FPI inflows."

After rising to a high of 85.0325 against the greenback, the rupee settled at 85.1275 a dollar, up from its previous close of 85.3675. The domestic currency moved in a range of 15 paise during the day and strengthened 0.3% against the greenback. 

A rise in most other Asian currencies owing to a weak dollar also supported the Indian unit. Other Asian currencies rose 0.2-1.0%, with the Malaysian ringgit being the best performer.

Immediately after the rupee opened at 85.1000 a dollar, it surged to an over 2-week high, reflecting a fall in the dollar against other currencies internationally, dealers said. The dollar index fell to an over 3-year low Monday as investors turned jittery and moved their funds to other safe-haven assets.

The dollar weakened against major global currencies after US President Donald Trump publicly criticised US Federal Reserve Chair Jerome Powell Thursday and asserted that he could "fire" Powell from his job, a move that could jeopardise the autonomy of the US Fed. 

At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.19, down from 99.40 Thursday and 99.28 Wednesday. The index fell to 97.21 during the European trading hours, its lowest level since Mar. 21, 2022.

Noting the sharp rise in the rupee, some importers rushed to purchase dollars to take advantage of the lucrative dollar/rupee levels, dealers said. This capped the gains of the domestic currency, dealers said. However, most importers remained on the sidelines during the rest of the day, anticipating the domestic currency to breach the psychologically key level of 85.00 a dollar, dealers said.   

Some dealers speculated the Reserve Bank of India also bought dollars when the rupee was trading at 85.0400 a dollar, which limited the rupee's rise. "Nats (nationalised banks) were bidding in the morning when it (rupee) touched 85.04 (a dollar). They (RBI) cannot let the rupee rise sharply too... they bought (dollars) today mostly for that and since it's a good level to shore up their (foreign exchange) reserves," a dealer at a brokerage said.

However, the rupee remained higher against the greenback as some traders continued to trim their long dollar positions as the dollar continued to be weak against major global currencies, dealers said. Further, a few foreign portfolio investors, who were looking to invest in the domestic stock market, also sold dollars, pushing the rupee to the day's high of 85.0325, dealers said. The benchmark indices, the BSE Sensex and the Nifty 50 ended 1.1% and 1.2% higher, respectively. 

FORWARDS

The one-year exact period dollar/rupee forward premium ended lower Monday after falling to a near-seven-week low, tracking a rise in US Treasury yields, dealers said. The yield on the benchmark 10-year US Treasury note rose 5 basis points on Thursday to 4.34%, after US jobless claims for the week ended Apr. 12 fell less than the analysts' forecasts, indicating a stable US labour market. Forwards of a currency pair are reflective of the interest rate differential between two countries.

The one-year exact period dollar/rupee forward premium fell to 2.02%, the lowest since Mar. 6. At lower forward premium levels, some banks purchased the greenback for forward delivery, which limited a further fall, dealers said.

At 1530 IST, the one-year exact period dollar/rupee forward premium was 172.68 paise, down from 177.17 paise Thursday and 187.16 paise Wednesday. On an annualised basis, the forward premium was 2.03%, down from 2.08% Thursday and 2.18% on Wednesday.

OUTLOOK

On Tuesday, the rupee is expected to track the movements of the dollar index and the offshore Chinese yuan, dealers said. Dealers expect importers to continue purchasing the greenback given the relatively lower dollar/rupee levels. They also expect overseas investors, who are looking to invest in the Indian markets, to sell dollars, which will support the rupee. 

However, if the rupee rises sharply, public-sector banks may step in to purchase dollars on behalf of the RBI to prevent the local currency from rising sharply and to shore up their dollar reserves, dealers said. Most dealers are of the view that while the rupee may appreciate in the near term, it will soon fall below 86.00 a dollar, tracking the Chinese yuan, which has been rising in recent days but is expected to fall soon. 

"Current appreciation is due to dollar weakness and inflows. Once the inflows stop, the rupee may not rise as much even with a weak dollar," a dealer at another brokerage firm said. "With intense trade tensions between the US and China and an expected recession in the US, the rupee will be back to 86 (a dollar) and below soon." 

During the day, the rupee is seen moving between 85.00 and 85.30 a dollar. Dealers see strong technical resistance for the Indian unit at 85.00 a dollar. Should the rupee rise above the key level of  85.00 a dollar, the gains in the domestic unit may be short-lived and will likely be capped by India's central bank.

India Rupee - World FX:Dlr index at over 3-yr low; euro up 1.4% at 4-yr high

MUMBAI - The dollar index fell to an over three-year low as investor sentiment took a hit after a tussle between US President Donald Trump and US Federal Reserve Chair Jerome Powell. Trump's administration said it is evaluating whether they could "fire" Powell from his job, a move which could jeopordise the autonomy and independence of the US Fed. 

On Thursday, Trump launched a series of verbal attacks on Powell and accused him of "playing politics" by not cutting the federal funds rate. "The Fed really owes it to the American people to get interest rates down. That's the only thing he's good for," Trump said. "I am not happy with him. If I want him out of there he'll be out real fast, believe me."

Further, Chicago Federal Reserve President Austan Goolsbee said Sunday that he hoped the US is not moving towards a situation where the ability of the US central bank to set monetary policy independent of political pressure is questioned. 

At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.07, down from 99.28 Thursday and 99.40 Wednesday. The index fell to 97.92, the lowest since March 2022. Consequently, the pound sterling rose 0.9% against the US currency.

Trump's threat to fire Powell only added to concerns of investors over the stability of the US economy amid a volatile trade policy and tariff war with China. Due to the ongoing tariff war, the US dollar was already losing its sheen with investors preferring to hold other currencies. The latest news about Trump threatening to fire Powell only added to the uncertainty, pushing investors to other currencies.

The euro strengthened 1.4% against the greenback and hit a 4-year high Monday. Major European markets, including the UK, Germany and France, are shut on account of Easter.

However, the gains in the euro were limited as the European Central Bank lowered its interest rates by 25 basis points to 2.25% Thursday amid ongoing tariff worries. The European Central Bank President Christine Lagarde warned that the bloc's economic growth will take a hit from the US tariffs, hinting at more monetary policy easing in the coming months. 

"Downside risks to economic growth have increased," Lagarde said. "The major escalation in global trade tensions and associated uncertainties will likely lower euro area growth by dampening exports, and it may drive down investment and consumption."

The Japanese yen was up 1.1% due to safe-haven flows. Data released Friday showed that Japan's core inflation accelerated in March, which supported the currency. The core consumer price index rose 3.2% on year last month, in line with analyst estimates. The core CPI, an inflation gauge closely watched by the Japanese central bank rose 2.9% in March from 2.6% in the previous month. The Bank of Japan is scheduled to meet for its next policy meeting on Apr. 30-May 1. 

The Australian dollar and the New Zealand dollar rose 0.9% and 1.0%, respectively, against the US currency due to a weak dollar index. The Canadian dollar traded 0.4% higher against the greenback. However, gains in the Canadian dollar were limited after crude oil prices declined Monday on the expectation of easing of tensions between the US and Iran. According to multiple media reports, Tehran and Washington agreed on Saturday to begin drafting a framework for the potential nuclear deal. 

Due to safe-haven inflows, the Swiss franc rose 1.5%, hitting an over 11-year high against the greenback earlier in the day.  (Gowri Lakshmi)

India Rupee: 1-year forward premium near 7-week low due to rise in US yields

MUMBAI – The one-year exact period dollar/rupee forward premium fell to a near seven-week low on Monday, tracking a rise in US Treasury yields, dealers said. The yield on the benchmark 10-year US Treasury note rose 5 basis points on Thursday to 4.34%, after jobless claims for the week ended Apr. 12 fell less than what the market had expected, indicating a stable labour market. Financial markets were closed on Friday for Good Friday.

"While the primary reason for today's fall is US yields, it seems premiums will largely stay lower because of expectations of rate cuts in India, while there is still uncertainty in the US," a dealer with a state-owned bank said.

The one-year exact period dollar/rupee forward premium fell to 2.02%, the lowest since Mar. 6. Noting the forward premiums, a few banks purchased the greenback for forward delivery, which limited its further downward movement, dealers said.

The dollar/rupee forward premium has been falling since the Reserve Bank of India cut the repo rate by 25 basis points and changed its stance to accommodative from neutral. A change in stance raised expectations of more rate cuts by the RBI, at a time when there is uncertainty around rate cuts in the US. Forwards of a currency pair are reflective of the interest rate differential between two countries.

With the Fed keeping rates steady, a rate cut in India lowers the rate differential between the two countries, bringing forward premiums down. The one-year forward premium fell over 26 basis points since Apr. 8, a day before RBI cut the repo rate. During the same time, the yield on the benchmark 10-year Indian government bond fell around 13 bps, while the yield on 10-year US Treasury note rose 8 bps.

At 1415 IST, the one-year exact period dollar/rupee forward premium was 172.50 paise, down from 177.17 paise Thursday and 187.16 paise Wednesday. On an annualised basis, the forward premium was 2.03%, down from 2.08% Thursday and 2.18% on Wednesday.  (Sourabh Kumar)

India Rupee: Remains sharply up as bks sell dlrs for FPIs, dlr index slumps

MUMBAI – The rupee remained sharply higher against the dollar as foreign banks sold dollars for foreign portfolio inflows and the dollar index weakened, dealers said. However, gains in the Indian currency were capped as importers purchased the greenback, noting the relatively lower dollar/rupee levels, they said. The rupee jumped to a high of 85.0325 during the day. 

"Importers are buying on dips (every fall in rupee/dollar), but most are still waiting. Exporters, on the other hand, remained on the sidelines as they wait for further fall (of the rupee)," a currency trader at a brokerage said. 

Foreign banks sold dollars, likely for FPIs looking to invest in the domestic stock market, dealers said. At 1347 IST, the benchmark indices, the Nifty 50 and the BSE Sensex, were up 1.1% each.

A slump in the dollar index also supported the rupee, dealers said. The dollar index plunged to an over three-year low after US President Donald Trump publicly criticised US Federal Reserve Chair Jerome Powell. On Thursday, Trump launched a series of verbal attacks on Powell and accused him of "playing politics" by not cutting interest rates. Trump also asserted that he had the power to "fire" Powell from his job. 

On Monday, the dollar index fell to 97.99, its lowest level since March 2022. At 1346 IST, the index, which measures the strength of the dollar against a basket of six major currencies, was at 98.07, against 99.40 Thursday and 99.28 Wednesday. 

While some importers actively purchased dollars noting the lucrative dollar/rupee levels, most remained on the sidelines, hoping for a further rise in the rupee, dealers said. Some dealers also speculated that the Reserve Bank of India might have bought the greenback at around 85.04 a dollar to shore up its foreign exchange reserves, which prevented the rupee from rising further. 

For the rest of the day, the rupee is seen moving between 84.95 and 85.35 a dollar. Dealers see immediate technical resistance for the Indian unit at 85.00 a dollar. (Gowri Lakshmi)

India Rupee: Technical levels for rupee - Apr 21

MUMBAI – At 1054 IST, the rupee was at 85.0900 per dollar. At 0900 IST, the rupee was at 85.1000 a dollar, against the previous close of 85.3675. 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: Surges to over 2-week high as dlr index slumps to 3-year low

MUMBAI – The rupee surged against the dollar Monday as the dollar index hit an over 3-year low after a tussle between US President Donald Trump and the US Federal Reserve chair Jerome Powell. Shortly after the domestic spot market opened, the rupee rose to 85.0400 a dollar, its highest since

Apr. 4. 

The rupee rose sharply against the US currency as the dollar index tumbled after investor sentiment took a hit as Trump threatened to fire Powell. On Thursday, Trump launched a series of attacks against Powell, accusing him of 'playing politics' by not lowering interest rates. The Trump administration is also evaluating whether it could fire Powell from his job, a move that would threaten the independence and autonomy of the US central bank. 

At 0928 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.30, down from 99.40 Thursday and 99.28 Wednesday. The index fell to an over three-year low of 98.24 in early Asian trade Monday. Due to the weak dollar index, most other Asian currencies also rose, and this provided further support to the rupee. Other Asian currencies rose between 0.3%-0.8% against the greenback in early Asian trade.

The rupee also received support as exporters sold dollars on expectation the rupee will rise further, dealers said. "Corporates have started going short, they are expecting a further rise. So before it rises further, a lot of them sold in the morning," a currency trader at a state-owned bank said. 

Noting the sharp rise of the rupee, some importers also purchased dollars to take advantage of the relatively lower dollar/rupee levels, which limited the rise of the domestic currency, dealers said. "Importers are active but they are not aggressive. They are also waiting for the the big figure (85 a dollar, which the rupee is expected to breach) which seems very likely today (Monday)," a dealer at a brokerage firm said. 

During the day, the rupee is seen moving between 84.95 and 85.20 a dollar. Dealers see immediate technical resistance for the Indian unit at 85.00 a dollar. (Gowri Lakshmi)

India Rupee - Asia FX: Rises as dollar index falls to over 3-year low

MUMBAI – Asian currencies strengthened against the greenback on Monday, as the dollar index plunged to its lowest level in over three years. The index plummeted after investor sentiment took a hit due to the ongoing tussle between US President Donald Trump and US Federal Reserve Chair Jerome Powell. Trump on Thursday began a series of verbal attacks on Powell and asserted that he had the power to "fire" him, a move that could threaten the independence of the US central bank.

He also accused Powell of "playing politics" by not lowering interest rates. Trump's administration is now evaluating whether it can evict Powell from his position. "The Fed really owes it to the American people to get interest rates down. That's the only thing he's good for," Trump said. "I am not happy with him. If I want him out of there he'll be out real fast, believe me."

At 0914 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.33, lower than 99.40 on Thursday and 99.28 on Wednesday. The index fell to 98.26 earlier on Monday, the lowest since March 2022. The Philippine peso was up 0.3%, while the Taiwanese dollar rose 0.4% against the greenback. 

The Indonesian rupiah was up 0.5% against the greenback. Bank Indonesia Governor Perry Warjiyo hinted that the central bank might continue its 'accommodative' monetary policy stance this year to support economic growth. The central bank is set to announce its policy decision on Wednesday, and is widely expected to hold rates steady. 

The Malaysian ringgit strengthened 0.5% against the US unit. Data published on Friday showed that Malaysia's economy expanded 4.4% on year in the quarter ended March, lower than the previous quarter's 5.0% growth. The growth in Jan-Mar was below the forecast of 4.8% by analysts in a Bloomberg poll, the third consecutive quarter of slower growth. 

The Chinese yuan rose 0.1% against the greenback. China kept its benchmark lending rates unchanged on Monday, in line with market expectations. On Thursday, Trump said he expects to make a trade deal with China without giving any details. "Oh we're going to make a deal," Trump said. "I think we are going to make a very good deal with China."

The South Korean won was up 0.4% against the greenback. Seoul is set to begin bilateral trade and tariff negotiations with Washington, with Finance Minister Choi Sang-mok and Trade Minister Ahn Duk-geun leading the Korean delegation. South Korea's government on Friday proposed a supplementary $8.6-billion budget to support the tariff-hit economy. 

"There are concerns about some companies struggling with liquidity difficulties due to the global trade conflict sparked by US tariffs and a delayed recovery in domestic demand," South Korea's acting President Han Duck-soo said at a Cabinet meeting on Friday.

The Thai baht was biggest gainer in early trade, rising 0.8% against the US unit. The Export-Import Bank of Thailand has launched five support measures to assist Thai entrepreneurs hit by US reciprocal tariffs, a deputy government spokesperson said on Sunday. The measures include establishing an export clinic with financial relief measures, providing assistance and guidance to entrepreneurs, supporting small and medium enterprises in expanding into new markets, supporting import of goods from the US without negatively impacting domestic business, and supporting Thai entrepreneurs in making investments in the US.  (Gowri Lakshmi)

India Rupee: Expected range for rupee - Apr 21

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: 

(Sourabh Kumar 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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