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Informist, Thursday, Apr. 24, 2025

By Pratiksha

NEW DELHI - The rupee erased all the day's losses and ended sharply higher against the dollar on Thursday as foreign banks continuously sold dollars for foreign fund inflows into corporates, and the dollar index slipped during European trade, dealers said. 

"There were some flows that started hitting from the morning itself, and that sort of reflected in the moves (in the rupee) throughout. Foreign banks were very active today," said a dealer at a private bank. "The dollar also came off during the second half, so that helped (the rupee) too."

After falling to a low of 85.6675 a dollar during the day, the Indian unit settled at 85.2600 on Thursday, against 85.4200 on Wednesday. With an appreciation of 0.2% against the US unit, the Indian currency came out as the third-best performer amongst its emerging market peers. The Malaysian ringgit was the best performer with a rise of 0.4% on Thursday. 

The domestic unit started the day on a weak note as the dollar index rose overnight on expectations that the US-China trade tensions may cool off. US Treasury Secretary Scott Bessent on Wednesday signalled towards the possibility of de-escalation of trade issues between Washington and Beijing. 

Noting the Indian unit's sharp fall at the open, some banks rushed to purchase the greenback on behalf of importers, who feared a further fall in the local unit going ahead. Following this, the rupee fell to the day's low of 85.6675 a dollar. 

However, three hours into the trade, the Indian currency started erasing losses as foreign banks stepped in to sell dollars, likely on behalf of foreign portfolio inflows into the domestic debt market, dealers said. Some foreign banks, including a UK-based bank, sold the greenback for foreign fund inflows into Indian corporates, which also boosted the Indian unit, dealers said. 

"Foreign banks were heard selling (dollars) hard. Some custodian flows kept coming," said a dealer at a state-owned bank. "FPIs were also maybe active in the first half."

As the Indian unit recovered all losses and made an upmove, some banks stepped in to sell the greenback on behalf of exporters, who feared the Indian unit may rise further, dealers said. Some exporters thought the local unit may have found strong support around 85.70-85.80 a dollar and may not fall beyond the key level, dealers said. 

"The RBI has left the FX market open in a wide range, so exporters and importers' sentiment are shifting on a range to range basis," said a dealer at a brokerage firm. 

During the last leg of the trade, the local currency rose above the key 85.30 level as the dollar index declined, tracking a jump in the euro during European trade, dealers said. Further, data on Wednesday showed that the US Composite purchasing managers' index dropped to 51.2 in April due to ongoing uncertainty around Trump's tariff policies.

At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.38, against 98.98 at 1530 IST Wednesday and 99.64 Tuesday.

FORWARDS

The one-year dollar/rupee forward premium ended higher Thursday, tracking a fall in the benchmark US Treasury yield after comments from Treasury Secretary Scott Bessent hinted at a possible easing of tensions around trade with China, dealers said. Forwards of a currency pair are reflective of the interest rate differential between the two countries.

US President Donald Trump has imposed a cumulative tariff of 145% on goods imported from China, though a few items face 245% tariff. In retaliation, China has imposed 125% tariff on certain US goods. "For now 2% seems like good support for the 1-year forward premium," said a dealer at a big state-owned bank. "What is happening in US yields is being reflected as of now."

The yield on the 10-year benchmark US Treasury note fell to 4.34% in early European trade Thursday, after closing 1 basis point lower at 4.40% on Wednesday. At 1530 IST, the one-year exact period dollar/rupee forward premium was 177.94 paise, up from 175.42 Wednesday. On an annualised basis, the premium was 2.09%, higher from 2.04% Wednesday. 

OUTLOOK

On Friday, the rupee is expected to trade within a range of 85.00-85.50 against the dollar. The Indian unit will take cues from overnight movement in the dollar index after the release of the US initial jobless claims data for the week ending Saturday, due later in the day, 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. The local unit may also take cues from movement in crude oil prices, they said.

"The rupee is expected to be in the range of 85 to 85.50 tomorrow (Friday) with a chance of breaking the 85 level also," said Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP.

Dealers see strong technical resistance for the Indian unit at 85.00 a dollar and immediate technical support at 85.80 a dollar.

India Rupee - World FX: Dollar index weakens before US jobless claims data

MUMBAI – The dollar index weakened Thursday ahead of the US initial jobless claims data for the week ended Saturday, due later in the day. The dollar index had hit a high of 99.98 Wednesday after US Treasury Secretary Scott Bessent suggested a likely de-escalation of trade issues between Washington and Beijing.

Bessent said that both the global economic superpowers should lower their high tariffs before trade negotiations can proceed. He also said President Donald Trump would not make the first move to lower the aggressively high tariffs. Meanwhile, data on Wednesday showed that the US Composite purchasing managers' index dropped to 51.2 in April due to ongoing uncertainty around Trump's tariff policies and his threats to the autonomy of the US Federal Reserve. 

At 1431 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.38, down from 98.98 at 1530 IST Wednesday and 99.64 Tuesday. The Swiss franc was up 0.4%, while the Canadian dollar rose 0.2%. 

The New Zealand dollar rose 0.5% against the dollar due to weakness in the US currency. Tracking gains in the New Zealand unit, the Australian dollar was up 0.3% against the greenback. Any change in the New Zealand economy directly impacts the currency of Australia due to their close bilateral trade relations. 

The euro was up 0.6% against the US dollar after data from Germany, the largest economy in the bloc, showed improvement in its business sentiment this month. Data on Thursday showed that Ifo Business Climate Index rose slightly to 86.9 in April, higher than analysts' forecast of 85.2.

The pound sterling was up 0.3% against the greenback. UK Finance Minister Rachel Reeves said Wednesday that the UK government is not in a rush to secure a trade deal with the US and ruled out the possibility of making concessions on food standards in talks with Washington. "We're not going to rush a deal. We want to get the right deal that's in our national interest and those talks are ongoing," Reeves said in Washington. "It's clear that the US as well wants a deal. And so those discussions continue."

Further, Bank of England Governor Andrew Bailey said the UK central bank is closely looking at the risk to its economic growth due to the heightened volatility in global trade. Bailey's comments come just two weeks before the Bank of England's policymakers meet for its next interest rate decision and economic forecasts. 

The Japanese yen was up 0.6% against the greenback. An International Monetary Fund official Wednesday said the Bank of Japan should not raise interest rates as uncertainty by the US trade policy may create a downside risk to growth and inflation. "We do see that if our reference scenario materialises, the BoJ interest rate increases will be pushed backwards in time," the official said. "Under a scenario where growth is dampened, the accommodation may need to be sustained for longer."  (Gowri Lakshmi) 

India Rupee: Premium up as US yld falls on view US-China tariff war may ease

India Rupee: Premium up as US yield falls on view US-China tariff war may ease

MUMBAI – The one-year dollar/rupee forward premium rose Thursday, tracking a fall in the benchmark US Treasury yield after comments from Treasury Secretary Scott Bessent hinted at a possible easing of tensions around trade with China, dealers said.

"Premiums have likely bottomed out for now, and therefore paying started," a dealer with a state-owned bank said. "While there is still uncertainty around tariffs, I think after yesterday's comments by Bessent, people have got some confidence... and they are expecting IRD (interest rate differential) to not fall as much."

Bessent said Wednesday that reciprocal tariffs imposed by the US and China were not at "sustainable levels". "There is an opportunity for a big deal here," he said. Both countries are expected to begin de-escalation in the "very near future", Bessent had said Tuesday.

US President Donald Trump has imposed a cumulative tariff of 145% on goods imported from China, though a few items face 245% tariff. In retaliation, China has imposed 125% tariff on certain US goods. 

Investors' confidence in US assets, which had fallen in recent weeks because of Trump's volatile trade policies, improved after US officials toned down their approach towards China. Trump also backed down from his earlier threat to remove Jerome Powell as chair of the US Federal Reserve, further improving the confidence of investors in US assets.

The softening of the US tone on tariffs on China has raised expectations that the Fed may be able to cut rates this year, as opposed to its earlier view, which was based on higher chances of tariff-driven inflation, dealers said. This is expected to push US yields lower, thus driving dollar/rupee forward premiums higher, dealers said.

The yield on the 10-year benchmark US Treasury note fell to 4.34% in early European trade Thursday, after closing 1 basis point lower at 4.40% on Wednesday. This pushed dollar/rupee forward premiums higher Thursday, as forwards of a currency pair are reflective of the interest rate differential between the two countries, dealers said. 

At 1442 IST, the one-year exact period dollar/rupee forward premium was 177.44 paise, up from 175.42 Wednesday and 172.69 Tuesday. On an annualised basis, the premium was 2.08%, higher from 2.04% Wednesday and 2.03% Tuesday.  (Sourabh Kumar)

India Rupee: Pares losses on flows into gilts mkt; importers' dlr buys weigh

MUMBAI – The rupee erased all the losses of the day and rose slightly against the dollar Thursday due to foreign fund inflows, especially into the government bond market, dealers said. However, dollar demand from importers and dollar purchases by a few overseas investors weighed on the domestic unit, dealers said. The Indian unit fell to an over one-week low of 85.6675 in early trade. 

"FPIs (foreign portfolio investors) have limited places to park their funds amid this global volatility," a currency trader at a brokerage firm said. "India has been a sweet spot for investors recently, which is being reflected now." 

In the past few weeks, most foreign fund inflows were in the government bond market rather than in the domestic stock market, dealers said. "With inflation expected to be in line, adequate liquidity, and clear communication from the RBI (Reserve Bank of India) about policies, the yield on the G-sec bond (10-year) should be at 6.1% by the year-end," the currency trader said. "Markets have discounted rate cuts now which is leading to capital appreciation in G-sec."

At 1221 IST, the yield on the 10-year benchmark gilt was at 6.35%, marginally up from 6.34% Wednesday. Currently, market participants are pricing in a 25-basis-point rate cut by the Reserve Bank of India's Monetary Policy Committee at its next meeting in June. Dealers expect yields to fall further on expectations of deeper rate cuts in 2025.

However, the rupee was weighed down by dollar purchases by importers, who were wary of a further fall in the domestic currency, dealers said. A few overseas investors, who pulled out funds from the domestic stock market, also bought dollars. This prevented the rupee from rising sharply, according to some dealers. At 1243 IST, both the Nifty 50 and the BSE Sensex were down 0.3% each.

For the rest of the day, the rupee is seen moving between 85.30 and 85.70 a dollar. Dealers see strong technical resistance for the Indian unit at 85.35 a dollar.  (Gowri Lakshmi)

India Rupee: Technical levels for rupee - Apr 24

MUMBAI – At 1058 IST, the rupee was at 85.5800 per dollar. At 0900 IST, the rupee was at 85.5800 a dollar, against the previous close of 85.4200. 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: Dn on importers' dollar buys, strong dlr; FX inflows limit fall

MUMBAI – The rupee opened weaker against the dollar Thursday as importers bought dollars, fearing a further fall in the Indian currency, dealers said. The strengthening of the dollar index also weighed on the Indian unit, they said. However, foreign fund inflows into Indian markets limited a further fall of the rupee, dealers said. 

"After opening, there was good demand (for dollars). They (importers) fear the rupee may go to 85.70 and above (beyond). But there is some strong resistance coming at around 85.60 from the flows and some dollar selling," a currency trader at a state-owned bank said. The rupee was supported as a few exporters sold dollars at 85.60 a dollar level, to take advantage of the relatively higher dollar/rupee levels, dealers said. 

The Indian unit came under pressure as the dollar strengthened against most major global currencies after the US hinted at de-escalation of its strained ties with China. US Treasury Secretary Scott Bessent said Wednesday that both countries should cut their aggressively high tariffs before trade negotiations proceed. However, Bessent also said US President Donald Trump would not unilaterally cut tariffs on Chinese imports. 

Following Bessent's remarks, the dollar index, which measures the strength of the dollar against a basket of six major currencies, touched a high of 99.94 Wednesday. At 0936 IST, the index eased and was at 99.67.

During the day, the rupee is seen moving between 85.50 and 85.75 a dollar. Dealers see strong technical support for the Indian unit at 85.70 a dollar.  (Gowri Lakshmi)

India Rupee - Asia FX: Most down amid ongoing US-China trade tensions

MUMBAI – Most Asian currencies traded lower against the dollar Thursday as investors assessed US Treasury Secretary Scott Bessent's recent comments on US-China trade relations. Bessent said Wednesday that he believes that the aggressive tariffs between the US and China must be lowered before trade negotiations can begin. He also said President Donald Trump would not unilaterally cut tariffs on Chinese imports. 

"...neither side believes that these are sustainable levels. As I said yesterday (Tuesday), this is the equivalent of an embargo and a break between the two countries in trade does not suit anyone's interest," Bessent said. He said Trump had no intentions of lowering tariffs first to de-escalate the strained relationship between the two superpowers. 

Following Bessent's comments, the dollar index, which measures the strength of the dollar against a basket of six major currencies, hit a high of 99.94 Wednesday on hopes of a de-escalation of the tariff war. At 0837 IST, the dollar index eased slightly and was at 99.59, down from 99.78 Wednesday and 99.64 Tuesday. 

Meanwhile, data on Wednesday showed that the US flash composite purchasing managers' index fell to a 16-month low in April due to uncertain trade and tariff policies by the Trump administration. The composite PMI output index, which tracks manufacturing and service sectors, fell to 51.2 this month, the lowest level since December 2023. 

The offshore Chinese yuan was down 0.1% against the greenback. Chinese authorities are now mulling the enhancement of cross-border financial services to promote the internationalisation of the yuan, a senior central bank official said Wednesday. The Thai baht traded flat against the greenback in early trade. The finance ministry is set to discuss soft loan measures with the Bank of Thailand to help exporters and importers affected by the US tariff.

The Malaysian ringgit traded flat against the greenback. Bank Negara Malaysia's Governor Abdul Rasheed Ghaffour said the country will need to revise its growth forecast to 4.5% from 5.5% this year due to ongoing uncertainties around the trade and tariff policies of the US. Meanwhile, data on Wednesday showed Malaysia's CPI rose only 1.4% in March, against a forecast of 1.6% increase in a Reuters poll. In February, the CPI rose 1.5%. 

The Indonesian rupiah was down 0.1% against the US unit. Indonesia's central bank Wednesday held its benchmark policy rates steady for the third consecutive time. The policy decision came in line with market expectations in order to stabilise the Indonesian currency amidst global trade uncertainties. 

"Our short-term priority is exchange rate stability. Once stability is maintained, the room for a rate cut will be more open and that would be the time to decide on future interest rate policy," Bank Indonesia Governor Perry Warjiyo said. The central bank kept the benchmark 7-day reverse repurchase rate unchanged at 57.5%, while also keeping two other policy rates steady.

The South Korean won was down 0.2% against the US currency. South Korea's economy unexpectedly contracted in Jan-Mar as exports and consumption stalled amid fears of being impacted from the US tariffs. The South Korean GDP contracted 0.2% from the quarter ended December. The weak data has raised expectations of an interest rate cut by the Bank of Korea as early as next month. 

The Philippine peso was up 0.2% against the dollar, while the Taiwan dollar was down 0.1%.  (Gowri Lakshmi)

India Rupee: Expected range for rupee - Apr 24

MUMBAI – Following are the expected support and resistance levels for the rupee on Thursday, as forecast by leading banks and brokerages in an Informist poll: 

(Gowri Lakshmi and Sourabh Kumar)

End

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

Edited by Vandana Hingorani

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