Informist Poll
Rupee seen little-changed by May-end; tensions with Pakistan eyed
This story was originally published at 21:21 IST on 2 May 2025
Register to read our real-time news.Informist, Friday, May 2, 2025
By Pratiksha
NEW DELHI – After a strong run in April, the Indian rupee is seen ending the month of May broadly unchanged from current levels as sustained weakness in the dollar index may neutralise the impact of weak risk appetite among investors amid heightened tensions between India and Pakistan. According to the median of estimates by 15 banks, brokerages, and corporates polled by Informist, the Indian unit may close this month at 84.50 a dollar. The rupee on Friday closed at 84.58 a dollar.
"India-Pakistan conflict has added a layer of uncertainty. Any escalation at the border could potentially dent investor confidence and the broader economy. However, if tensions remain contained, India continues to be a favourable destination for FII (foreign institutional investors) flows, which should support the rupee," said Jateen Trivedi, vice president of commodity and currency research at LKP Securities.
Relations between India and Pakistan plummeted following the deadly attack in Pahalgam on Apr. 22, with the Indian government accusing Pakistan of supporting militants. The Pakistani government said earlier this week that it had credible intelligence that India may carry out military action against it in the next 24-36 hours on the pretext of "baseless and concocted allegations of involvement in Pahalgam incident."
Tensions in the Indian subcontinent aside, market participants expect a declining dollar index to continue providing a cushion to the rupee. The index, which measures the strength of the dollar against a basket of six major currencies, fell 4.4% in April due to soft US economic data and President Donald Trump declaring a 90-day pause on his reciprocal tariffs.
"The current dollar weakness is likely to persist. The US economy is facing challenges, including a soft labour market, trade disruptions, and fiscal uncertainty, which will likely weigh on the dollar. While short-term rebounds to 102 are possible driven by the de-escalation of a trade war...the broader trend points to a decline towards 96-97 in the dollar index," said Amit Pabari, managing director at CR Forex. At 2030 IST, the dollar index was at 99.46.
There is also hope the recent pick-up in foreign inflows into domestic equities may continue in the near-term owing to optimism about India and the US agreeing to a bilateral trade deal in the coming months. In April, foreign portfolio investors invested $1.3 billion in the Indian stock market.
However, a potential weakening of the yuan amid volatile trade talks between the US and China could pressure the Indian rupee, according to poll respondents. The yuan weakened 0.2% against the dollar in April.
As far as the Reserve Bank of India is concerned, market participants expect the central bank to continue allowing sharp movements in the rupee's exchange rate as part of its hands-off approach. This is reflected in the poll estimates, which are in a wide range of 82.90-85.50 per dollar.
On the whole, while the bias for the rupee seems to be tilted to the positive, evolving developments on the geopolitical and trade policy front will keep market participants on the edge.
POLL DETAILS
|
Participant |
May-end |
Jun-end |
|
Bank of Baroda |
84.00-85.00 | - |
|
CR Forex |
85.00 | 83.50-84.00 |
|
CSB Bank |
84.50 | 84.75 |
| DBS Bank India | 84.50 | - |
|
Finrex Treasury Advisors LLP |
84.25 | 84.50 |
|
Globe Capital Market |
83.50-85.30 | 83.00-85.80 |
|
HDFC Securities |
84.10-85.50 | 83.90-85.60 |
|
Industrial and Commercial Bank of China |
85.00 | - |
|
IDFC FIRST Bank |
84.50-85.00 | - |
|
Karur Vysya Bank |
85.20 | - |
|
Large brokerage firm |
82.90-84.90 | - |
|
Large state-owned oil company |
84.80 | - |
|
LKP Securities |
83.00 | 82.50 |
| Mecklai Financial Services | 85.50 | 84.50 |
|
UCO Bank |
84.30 | 84.30 |
|
Median |
84.50 | 84.45 |
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Ashish Shirke
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
Informist Media Tel +91 (11) 4220-1000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2025. All rights reserved.
To read more please subscribe
Share this Story:
