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Informist, Wednesday, Apr. 23, 2025

By Pratiksha

NEW DELHI – The rupee ended sharply lower against the dollar Wednesday as banks persistently bought the greenback on behalf of oil marketing companies and other importers, dealers said. Some foreign banks also bought the greenback on behalf of foreign portfolio investors, which also weighed on the Indian unit, they said. The rupee settled lower for the second consecutive trading day. 

"After the kind of gains the rupee has seen in the last few days, importers are now thinking the cap (for the rupee's rise) is at 85.00 now, so they are buying (dollars) at all levels now," said a dealer at a private bank.

The rupee ended at 85.4200 a dollar on Wednesday, down 0.3% from the previous close of 85.1875. The Indian currency was the worst performer amongst its emerging market peers on Wednesday, while the Chinese yuan and Thai baht were the best performers with a gain of 0.3% each.

The local unit started the day on a weak note as the dollar index rose sharply overnight after US President Donald Trump backed away from his threats to fire Federal Reserve Chair Jerome Powell. Earlier this week, Trump repeatedly attacked Powell for not cutting rates since the president took office again in January.

At 1530 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 98.98 against 99.64 on Tuesday and 98.32 on Monday.

"The dollar index is likely to face support at the 98.50 level and resistance at 99.60 levels. A breach of the resistance could pave the path towards 101.50-102.00 levels," Amit Pabari, managing director at CR Forex, said. 

An hour into trade, the rupee fell past the key 85.40 a dollar mark as importers rushed to purchase the greenback on the expectation that the Indian unit may fall further in the near-term, dealers said. Importers also bought the US unit on the view that the Indian unit may not rise beyond 85.00 a dollar.  

Before Tuesday, the Indian unit had maintained a gaining streak for five consecutive days. However, the domestic unit failed to rise past the key 85.00 a dollar mark, as the Reserve Bank of India likely intervened through dollar purchases, according to dealers. "85.00 seems like a hard stop for now. Most importers had booked around those levels, but some are buying (dollars) now," said a dealer at a state-owned bank. 

Noting the sharp rise in the dollar index overnight, some traders also bought the greenback to cut their short dollar positions, which also weighed on the local currency, dealers said. Some foreign banks, including a UK-based bank, purchased the greenback, likely on behalf of FPIs, looking to pull out funds from the Indian market, which dragged the domestic unit to the day's low of 85.5250, dealers said. So far in April, FPIs have withdrawn $3.67 billion from the domestic markets on a net basis. 

However, losses in the Indian unit were limited, tracking gains in the Chinese yuan, according to dealers. The onshore Chinese yuan rose against the dollar on hopes of easing trade tensions between the US and China. 

On Wednesday, Trump said he wanted to strike a trade deal with China that would avoid tariffs anywhere near 145%, adding that he would dictate the terms if Beijing declined to engage in negotiations. US Treasury Secretary Scott Bessent also indicated, during a closed-door conference, that he anticipated a de-escalation in US-China trade tensions, Reuters reported.

The dollar index edged lower during European trading hours, which also supported the Indian unit, as per dealers. While some exporters stepped in to sell dollars, noting the relatively higher dollar/rupee levels, most remained on the sidelines in expectation that the Indian currency may fall further in the coming days, dealers said. 

FORWARDS

The one-year dollar/rupee forward premium settled slightly higher on Wednesday as some banks purchased forward dollars, to take advantage of the arbitrage between the onshore and offshore non-deliverable forward levels, dealers said.

However, volume in the market was lower than usual as most market participants refrained from buying or selling forward dollars in significant quantum ahead of the release of the US flash Purchasing Managers' Index due later on Wednesday, dealers said. Market participants await the economic data to assess the health of the US economy and the prospects of the Fed cutting rates.

A fall in the benchmark 10-year US Treasury yield also supported the forward premium, according to dealers. US Treasury yields fell slightly Tuesday as Trump walked back on his comments to fire Powell, which helped restore investor confidence in US monetary policy credibility. Forwards of a currency pair are reflective of the interest rate differential between the two countries.

Market participants now await minutes of the RBI's Monetary Policy Committee meeting held in April, due at 1700 IST, for more cues on the central bank's rate cut cycle.

At 1530 IST, the one-year exact-period dollar/rupee forward premium was 2.04%, against 2.03% on Tuesday. On an absolute basis, the premium was 175.42 paise, against 172.69 paise on Tuesday.

OUTLOOK

On Thursday, the rupee is expected to trade within a range of 85.20-85.50 against the dollar. The Indian unit will take cues from overnight movement in the dollar index after the release of the US flash Purchasing Managers' Index due later on Wednesday, dealers said. 

The local unit may also take cues from movement in the Chinese yuan amid the evolving developments related to the US-China trade tensions, they said. "It is to be seen if the rupee will follow the dollar more or the yuan. Both are fluctuating a lot. I also think that the dollar sell-off is overdone now, so maybe it is time to track the yuan now," said a dealer at a foreign bank. 

Dealers see strong technical resistance for the Indian unit at 85.00 a dollar and immediate technical support at 85.50 a dollar.

India Rupee - World FX: Australian dlr up on hope US-China tensions may ease

NEW DELHI – The Australian dollar rose by 0.8% against the dollar following remarks from US President Donald Trump that hinted at easing tensions in the US-China trade dispute. Given the strong trade ties between Australia and China, factors affecting China's economy often have a direct impact on Australia. The Chinese yuan was also up 0.2% against the greenback.

On Wednesday, Trump said he wanted to strike a trade deal with China that would avoid tariffs anywhere near 145%, adding that he would dictate the terms if Beijing declined to engage in negotiations. US Treasury Secretary Scott Bessent also indicated, during a closed-door conference, that he anticipated a de-escalation in US-China trade tensions.

Further, data released on Wednesday showed that Australia's private sector activity expanded for the seventh straight month in April, supported by continued growth in both manufacturing and services. This positive momentum further boosted the Australian dollar. The New Zealand dollar also advanced, rising 0.4% against the US dollar, tracking gains in the Australian currency.

The euro rose 0.2% against the US dollar on Wednesday, despite data showing a contraction in Germany's private sector activity this month, weighed by weakness in services and ongoing trade uncertainty. The HCOB German flash composite Purchasing Managers' Index fell to 49.7 in April from 51.3 in March--its lowest level since December and below the 50.0 threshold that signals contraction.

The dollar index edged lower during European trading hours, after rising sharply on Tuesday, on hopes of easing trade tensions between the US and China. On Tuesday, the dollar index had jumped after Trump backed away from threats to dismiss Federal Reserve Chair Jerome Powell.

At 1530 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 98.98 against 99.64 on Tuesday and 98.32 on Monday. The Japanese yen was down 0.1% against the dollar while the pound sterling was flat. Market participants now await the release of the US flash Purchasing Managers' Index due later in the day for more cues on the health of the world's largest economy.  (Pratiksha)

India Rupee: Premium steady before US flash PMI; bks' fwd dlr buys support

MUMBAI – The one-year dollar/rupee forward premium was steady on Wednesday as most market participants refrained from buying or selling forward dollars in significant quantum ahead of the release of the US flash Purchasing Managers' Index, dealers said. However, some banks purchased forward dollars, noting the arbitrage between the onshore and offshore non-deliverable forward levels, which supported the premium, dealers said.

"There is less activity in the forward market today," a dealer at a state-owned bank said. "Most people are waiting for the US flash PMI." The US flash manufacturing and services Purchasing Managers' Index for April is scheduled to be released after Indian market hours on Wednesday. Market participants await the data to assess the health of the US economy and the prospects of the Federal Reserve cutting rates.

The one-year exact-period dollar/rupee forward premium was 2.03% at 1342 IST, similar to Tuesday and Monday. On an absolute basis, the premium was 174.42 pause, against 172.69 paise Tuesday and 172.68 paise Monday.

The yield on the benchmark 10-year US Treasury note fell further in European trade Wednesday, after falling by 1 basis point Tuesday to settle at 4.41%. The yield fell after US President Donald Trump said tariffs on China could be reduced. If China does not initiate negotiations, the US would set the terms of the deal, Trump said, adding that tariffs on China would fall significantly.

This boosted investor confidence in US assets, which had fallen sharply in the past week due to the tariff war and due to Trump's criticism of Federal Reserve chair Jerome Powell. Trump also said that he would not be firing Powell. It restored investors' confidence in the independence of the US central bank.  (Sourabh Kumar)

India Rupee: Falls more on importers' dollar buys, FX outflows

MUMBAI – The rupee was sharply down against the dollar due to importers' dollar purchases and as some foreign banks bought dollars for their overseas clients who probably wanted to exit domestic equities, dealers said. 

"There are foreign banks buying above 40 levels (84.40 a dollar), but in the morning it was only importers," a dealer at a state-owned bank said. "Foreign banks are buying because there must be some equity outflow. I think FIIs are going to be net negative today."

After opening slightly lower, the rupee came under further pressure as importers increased their dollar purchases. Among them, oil marketing companies bought the most dollars, dealers said. About an hour into trade, some foreign banks started buying dollars, pushing the rupee lower against the greenback, dealers said. 

While most exporters waited for the rupee to fall further, a few of them sold dollars, which limited the fall in the Indian currency, dealers said. The rupee has fallen 30 paise so far in the day, hitting the day's low of 85.4875 a dollar.

The dollar index has remained steady since morning. After rising on Tuesday, the index eased slightly early Wednesday due to a recovery in the Japanese yen, which carries a weightage of 13.6% in the dollar index. The yen recovered slightly on expectation of Japan securing a trade deal with the US.

The dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 99.19 at 1239 IST, down from 99.64 on Tuesday but higher than 98.32 on Monday.

During the day, the rupee is seen moving between 85.25 and 85.55 a dollar. Dealers see strong technical support for the Indian unit at 85.55 a dollar, which may break if foreign banks increase their quantum of dollar purchases.  (Sourabh Kumar) 

India Rupee: Technical levels for rupee - Apr 23

MUMBAI – At 1122 IST, the rupee was at 85.4650 per dollar. At 0900 IST, the rupee was at 85.2625 a dollar, against the previous close of 85.1875. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Sourabh Kumar)

India Rupee - Asia FX:Most dn as dlr index rises; South Korean won falls most

MUMBAI – Most Asian currencies were down against the greenback as the dollar index strengthened after US President Donald Trump said he had no intention to fire Federal Reserve chair Jerome Powell. It improved investor confidence in US assets. 

Further, Trump also said Tuesday that a trade deal with China was possible, which supported the US dollar. He said the US will set the terms of the deal in the case of no initiative from the Chinese side. After negotiations, tariffs on China would fall significantly, he said. Earlier in the day, US Treasury Secretary Scott Bessent also said in a closed-door conference that he expected US-China trade tensions to de-escalate.

After rising Tuesday, the dollar index eased slightly in early trade Wednesday due to a recovery in the Japanese yen, which carries a weightage of 13.6% in the dollar index. The yen recovered slightly on expectation of Japan securing a trade deal with the US.

The dollar index, which measures the strength of the greenback against a basket of six major currencies, was 99.33 at 0944 IST, down from 99.64 Tuesday but up from 98.32 Monday.

The Taiwan dollar was down 0.1% against the greenback due to a lower-than-expected rise in its exports in March. Export orders rose 12.5% on year to $53.04 billion, lower than the expectation of 15.25% in a Reuters poll. A slow-down in exports may limit the growth in the country's economy, as exports have a major contribution to the country's economy.

The South Korean won fell 0.3% against the greenback due to a rise in the dollar index. The Philippines peso rose 0.1% against the greenback. The Indonesian rupiah was down 0.1% against the greenback. While a strong dollar index weighed on the Indonesian currency, the fall was limited as a poll by Bloomberg shows that the country's central bank may keep the rates steady at its policy decision later in the day.

The Malaysian ringgit fell 0.5% against the greenback. The Thai baht fell 0.1% against the greenback. On Tuesday, Thailand's cabinet appointed the government-backed candidate as the country's central bank chief. Market participants now look forward to the release of US Flash Purchasing Managers' Index, due later in the day.  (Sourabh Kumar)

India Rupee: Falls on recovery in dollar index; importers' dollar buys weigh

MUMBAI – The rupee fell against the dollar in early trade Wednesday due to a recovery in the dollar index after US President Donald Trump backed off on his comments about firing Federal Reserve chair Jerome Powell, dealers said.

Trump's continuous criticism of Powell along with the threat to remove him had hit investors' confidence in US assets, leading to a decline in the value of the US dollar in the past week. The dollar was also supported on Tuesday by Trump's comment that a trade deal with China was possible. 

"Some importers' interest (in buying dollars) was seen in the morning," a dealer at a state-owned bank said. "But I think the majority of importers would again wait for it (rupee) to rise above 15 (85.15 a dollar), and exporters would only come above 45 (85.45 a dollar)."

Shortly after opening lower, the rupee moved further down by 4 paise as a few importers purchased dollars on the view that the rupee may fall more, dealers said. Exporters are unlikely to sell the dollar in large quantities unless the rupee moves closer to 85.40 a dollar, a few dealers said. Some foreign fund inflows into domestic equities are likely to support the Indian currency during the day, dealers said.

The dollar index is expected to strengthen further when European markets open, which could put more pressure on the Indian currency in the afternoon, dealers said. After recovering on Tuesday, the dollar index eased slightly in early trade Wednesday. The dollar index eased due to a slight recovery in the Japanese yen, which carries a weightage of 13.6% in the dollar index. The yen recovered slightly on expectations of Japan securing a trade deal with the US.

The dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 99.29 at 0927 IST, down from 99.64 Tuesday but higher than 98.32 on Monday.

During the day, the rupee is seen moving between 85.15 and 85.45 a dollar. Dealers see strong technical support for the Indian unit at 85.30 a dollar.  (Sourabh Kumar) 

India Rupee: Expected range for rupee - Apr 23

MUMBAI – Following are the expected support and resistance levels for the rupee on Wednesday, 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 Saji George Titus

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