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Informist, Tuesday, Apr. 29, 2025

By Gowri Lakshmi

MUMBAI – The rupee ended sharply lower against the dollar Tuesday as importers persistently purchased dollars on fears that the Indian currency may depreciate further owing to the escalation of tension between India and Pakistan, dealers said. The rupee was further weighed as a few oil marketing companies purchased dollars to take advantage of the relatively lower dollar/rupee levels earlier in the day, dealers said. 

"There were importers buying (dollars) on dips (fall in dollar/rupee) since morning," a dealer at a state-owned bank said. "But the market came into a panic mode for some time after the Indo-Pak news. If this is the case, the rupee will likely depreciate more in the coming days."

Media reports Tuesday said Pakistan has claimed that it has shot down an Indian drone across the Line of Control in Pakistan-occupied Kashmir.

After moving in a range of over 45 paise during the day, the Indian unit settled at 85.2625 a dollar, 0.3% lower from the previous close of 85.0300 a dollar. Volume in the currency market was better-than-usual as banks bought dollars due to payment obligations towards the end of the month, dealers said. 

Other Asian currencies traded higher against the greenback as investors await more clarity over the trade relationship between the US and China. Barring the Thai Baht and the Indian rupee, other Asian currencies rose 0.2-0.9%, with the Malaysian ringgit being the best-performing currency in the region. The Indian currency was the worst performer in the pack.

The rupee opened slightly lower against the greenback but quickly rose to an over four-month high of 84.9400 a dollar owing to foreign fund inflows, dealers said. Banks sold dollars on behalf of foreign portfolio investors, who were looking to invest in the domestic stock market and government bond market, dealers said. So far in April, foreign portfolio investors have net bought Indian equities worth $680 million. Investors' sentiments improved after US Treasury Secretary Scott Bessent Monday said "India would be one of the first countries to sign the (trade) deal with the US."

However, the rupee's rise was capped as public-sector banks stepped in to purchase the greenback, likely on behalf of the Reserve Bank of India, dealers said. "Nats (nationalised banks) strongly resisted any movement above 84.95 (a dollar), it is a key level which will be difficult to break," a currency trader at a brokerage said. "The rupee has been hovering around that level for a couple of days now, but there is no way they (RBI) will let it break easily."

Noting the Indian unit's rise, some importers rushed to purchase the greenback to take advantage of the lower dollar/rupee levels, according to dealers. Some importers also purchased the US currency to meet their month-end payment requirements, dealers said. Oil marketing companies also stepped in to buy the greenback, given the attractive dollar/rupee levels and relatively lower crude oil prices, they said. 

Oil prices declined Tuesday on expectations of lower demand for crude oil due to the strained relationship between the US and China, and on fears of a recession in the US. At 1530 IST, the June Brent crude contract on the Intercontinental Exchange was at $64.95 per barrel, sharply down from $65.86 per barrel Monday and $66.87 per barrel Friday. 

India signed a deal with France on Monday to purchase 26 Rafale-Marine aircraft for the Indian Navy, the Indian defence ministry said in a statement. The deal is worth about $7.4 billion, according to reports. Some dealers estimated that around $500 million was likely bought by foreign banks in connection with the deal, which weighed on the Indian unit.

Later in the day, some importers also purchased dollars, wary of further escalation in tensions between India and Pakistan, dragging the rupee to the day's low of 85.3925, dealers said. The currency market turned volatile after news reports said that the Pakistan army shot down an Indian quadcopter along the Line of Control in Jammu & Kashmir, dealers said. The Indian "spy drone" was shot down after it breached the Line of Control between India and Pakistan, a state-run Pakistan media organisation reported. Some dealers speculated that the RBI intervened through dollar sales at around 85.39 a dollar, preventing the rupee's further fall.

The dollar index remained broadly steady Tuesday as traders await more clarity on the US-China trade relations. At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.30, slightly up from 98.94 Monday and 99.59 Friday.

FORWARDS

The one-year dollar/rupee forward premium ended slightly lower Tuesday on the view that the banking system liquidity would improve after the Reserve Bank of India late Monday announced that it will purchase government securities worth INR 1.25 trillion through open market operation auctions in May, dealers said.

However, most market participants avoided buying or selling forward dollars in large quantum as they remained unclear of the future movement in forward premiums due to the uncertainty around the impact of tariffs on the US economy, dealers said.

The fall in the one-year dollar/rupee forward premium was limited because the benchmark 10-year US Treasury yield moved lower Monday. At 1530 IST, the premium on the one-year exact-period dollar/rupee forward contract was 194.97 paise, tad lower than 195.00 paise Monday. On an annualised basis, the premium was at 2.27%, down from Monday's close of 2.29%.

OUTLOOK

On Wednesday, the rupee will likely move between 85.10 and 85.60 a dollar, dealers said. Traders will closely track developments on the geopolitical front, especially tensions between India and Pakistan. Market participants will also look out for further clarity on trade policies from the US. 

The rupee will also take cues from movement in the dollar index after the US Job Openings and Labour Turnover Survey later in the day and the Chinese yuan. Dealers expect foreign fund inflows into the domestic equity market and the government bond market, which may support the rupee. 

Some dealers also expect the rupee to be weighed by dollar purchases by importers, who are wary of a further fall in the rupee. However, public-sector banks may step in with dollar sales, likely on behalf of the RBI, to prevent the rupee from falling sharply and to curb any excessive market volatility. 

Dealers see strong support for the Indian unit at 85.80 a dollar, and resistance at 84.90 a dollar. 

India Rupee - World FX: Dollar index steady as Trump to ease auto tariffs

MUMBAI – The dollar index remained steady in European trade as US President Donald Trump's administration said it will tackle the impact of automobile tariffs by lifting some duties on imports of automobile parts while maintaining the tariffs on cars made abroad.

"President Trump is building an important partnership with both the domestic automakers and our great American workers," US Commerce Secretary Howard Lutnick said. "This deal is a major victory for the President's trade policy by rewarding companies who manufacture domestically, while providing runway to manufacturers who have expressed their commitment to invest in America and expand their domestic manufacturing."

At 1410 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.14, slightly up from 98.94 but down from 99.59 Friday. Market participants are waiting for the US job openings and labor turnover survey for March due later in the day. The Swiss franc was down 0.6% against the US currency and the Japanese yen fell 0.3%.

The euro was down 0.2% against the greenback after European Central Bank board member Piero Cipollone Tuesday said a global trade war would weigh on economic growth and inflation in the bloc. He said a full-fledged trade war could also trigger an "unambiguously recessionary effect" on the countries involved.

"The recent increase in trade policy uncertainty could reduce euro area business investment by 1.1% in the first year and real GDP growth by around 0.2 percentage points (20 basis points) in 2025-26," Cipollene said. "The observed increase in financial market volatility might imply lower GDP growth of about 0.2 percentage points in 2025." Traders will now assess key economic data from the bloc, including consumer confidence for April and industrial sentiment for this month, due later in the day.

The pound sterling fell 0.2% against the greenback. The Australian dollar and the New Zealand dollar were both down 0.2% as investors await more clarity on the US-China trade dispute. The Canadian dollar was steady against the US currency after Canadian Prime Minister Mark Carney's Liberal party retained power in the federal elections held Monday. However, the party fell short of a majority government that Carney wanted to hold trade negotiations with the US.  (Gowri Lakshmi) 

India Rupee: Premium slightly down after RBI announces OMO auctions late Mon

MUMBAI - The one-year dollar/rupee forward premium fell slightly Tuesday on the view that the banking system liquidity would improve after the Reserve Bank of India late Monday announced that it will purchase INR 1.25 trillion worth of government securities in May, dealers said.

"Forwards are down today because of OMO auction mostly, but still the movement is not that much because market is still confused whether Fed (US Federal Reserve) will cut more this year or not," a dealer with a state-owned bank said.

On Monday, the RBI net absorbed INR 903.39 billion from the banking system, down from INR 1.09 trillion Sunday. Since Mar. 29, the banking system liquidity has been in surplus. The RBI's announcement to purchase government securities in May was after a review of the current and evolving liquidity conditions, it said. The central bank said it will purchase government securities in four tranches throughout May. 

Further, some banks sold dollars for forward delivery, noting relatively higher premiums. However, most market participants did not buy or sell forward dollars in large quantum as they were unclear of the movement in forward premiums due to the uncertainty around the impact of tariffs on the US economy, dealers said.

While US officials have indicated that they were in trade talks with China, investors were still concerned about the conflict between the two countris due to a lack of any confirmation from the Asian nation. Moreover, Commerce Secretary Howard Lutnick said the US will reduce the impact of automotive tariffs by bringing down some tariffs on imported parts used in cars manufactured domestically.

Market participants remained watchful of data releases from the US scheduled in the rest of the week to assess how US President Donald Trump's tariffs affected the world's largest economy. The US employment report for April is due to be released Friday, along with global manufacturing purchasing managers' index.

A fall in the one-year dollar/rupee forward premium was limited because the benchmark 10-year US Treasury yield moved lower Monday. It fell six basis points Monday to settle at 4.23%. At 1413 IST, the premium on the one-year exact-period dollar/rupee forward contract was 194.00 paise, against 195.00 paise Monday. On an annualised basis, the premium was at 2.28%, against Monday's close of 2.29%.  (Sourabh Kumar)

India Rupee: Falls further on reports of escalating India-Pakistan tensions

MUMBAI – The rupee fell further against the dollar on Tuesday and was pulled to a low of 85.3925 a dollar after reports that tensions between India and Pakistan escalated. According to media reports, the Pakistan army shot down an Indian quadcopter along the Line of Control in Kammu & kashmir. The "spy drone" was shot as it breached the Line of Control, a state-run Pakistan media organisation said.

The rupee was also weighed down by demand for dollars from oil marketing companies, dealers said. "Today (Tuesday) oil companies are active because the rupee levels are favourable and oil prices have come down as well," a currency trader at a brokerage firm said. However, some dealers said the Reserve Bank of India stepped in with dollar sales at 85.39 a dollar, preventing further fall of the rupee. 

Oil prices fell Tuesday as investors scaled down their forecast for demand growth amid a strained trade relationship between the US and China. At 1241 IST, the June Brent crude contract on the Intercontinental Exchange was at $65.19 per barrel, down from $65.86 per barrel Monday and $66.87 per barrel Friday. 

Some banks also purchased dollars for foreign fund outflows, which put the rupee under more pressure, dealers said. "There have been outflows for the Rafale deal, some half a yard ($500 million) has been bought by foreign banks already," a dealer at a state-owned bank said. India signed a deal with France on Monday to buy 26 Rafale fighter jets worth $7.4 billion, the Indian defence ministry said in a statement. 

For the rest of the day, the is seen moving between 85.00 and 85.50 a dollar. Dealers see strong technical support for the Indian unit at 85.40 a dollar.  (Gowri Lakshmi)

India Rupee: Technical levels for rupee - Apr 29

MUMBAI – At 1103 IST, the rupee was at 85.2175 per dollar. At 0900 IST, the rupee was at 85.0775 a dollar, against the previous close of 85.0300. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Sourabh Kumar, Pratiksha and Gowri Lakshmi)

India Rupee: Sharply dn on importer dollar buys; FX inflows limit losses

MUMBAI – The rupee traded sharply lower against the dollar Tuesday as importers purchased the greenback to take advantage of the relatively lower dollar/rupee levels and to meet their month-end payment obligations, dealers said. However, rupee's losses were limited owing to foreign fund inflows, dealers said.

The rupee rose above the key level of 84.95 a dollar momentarily in early trade, when the the Reserve Bank of India stepped in by purchasing dollars to prevent a rise of the rupee, dealers said. "There is strong resistance at 84.95 levels. They (RBI) have to protect otherwise the rupee will go to 84.70 and above levels soon," the dealer at the state-owned bank said. 

Volume in the currency market is better-than-usual due to payment requirements towards the end of the month, dealers said. The rupee has moved over a range of 40 paise within an hour the market opened. A lot of importers also purchased the greenback on rumours that the Indian Army had undertaken an operation in retaliation to the terrorist attack in Pahalgam on Apr. 22, which killed 26 civilians and injured many. Importers purchased the greenback on fears that the rupee may come under pressure in the event of a further deterioration in India-Pakistan relations.

The Indian currency was also supported by foreign fund inflows into the domestic stock market and government bond market, dealers said. So far in April, foreign portfolio investors have bought $680 million worth of Indian equities. "I think the India-US trade deal has sparked positive sentiments amongst investors again," a dealer at a state-owned bank said. US Treausry Secretary Scott Bessent said Monday that top US trading partners had made "very good" progress in negotiating trade deals and averting the aggressive reciprocal tariffs and that "India would likely be signing one of the first deals". 

The dollar index was slightly up in early Asian trade. At 0932 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.22, slightly up from 98.94 Monday but down from 99.59 Friday. 

During the day, the rupee is seen moving between 84.90 and 85.50 a dollar. Dealers see strong technical support for the Indian unit at 85.40 a dollar.  (Gowri Lakshmi)

India Rupee - Asia FX: Most up as dlr index slips; mkt awaits US econ data

MUMBAI – Most Asian currencies rose against the US dollar Tuesday as investors awaited clarity on the US-China trade standoff. The dollar slipped against major currencies in early Asian trade ahead of the US Job Openings and Labor Turnover Survey, due later in the day. Market participants also await US GDP data for the quarter ended March and personal consumption expenditure data later this week. 

US Treausry Secretary Scott Bessent on Monday said top US trading partners had made "very mood" proposals to avert the aggressive tariffs imposed by the US. Bessent said it was up to China to de-escalate the strained relationship. However, US President Donald Trump's team considered reducing the impact of his automotive tariffs on Tuesday by lifting some duties imposed on imported automobile parts. "President Trump is building an important partnership with both the domestic automakers and our great American workers," Commerce Secretary Howard Lutnick said. 

At 0834 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.07, slightly higher than 98.94 on Monday but lower than 99.59 on Friday. The Malaysian ringgit was up 0.7%, while the Indonesian rupiah rose 0.4%. 

The South Korean won was down 0.1% against the US dollar after Vice Industry Minister Park Sung-taek said on Monday that Seoul does not expect a comprehensive trade agreement with Washington before South Korea's presidential election on Jun. 3. Sung-taek said the agreement after bilateral talks would be delayed due to complexity of the issues and political uncertainties. 

The Philippine peso was up 0.2% against the greenback amid ongoing trade talks with the US. Philippines' trade chief said the country, hit by 17% import duty by the US, would seek to bring the tariffs to zero. The Thai baht was up 0.1% against the greenback. Bank of Thailand will announce its monetary policy decision on Wednesday, and the central bank is widely anticipated to lower its policy rate by 25 basis points due to slowing economic growth in view of US tariff policies. 

The Chinese yuan rose 0.2% against the US currency, while the Taiwan dollar traded 0.5% higher.  (Gowri Lakshmi)

India Rupee: Expected range for rupee - Apr 29

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 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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