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Informist, Monday, May 5, 2025

By Sourabh Kumar

MUMBAI – The rupee ended Monday at a six-month high against the dollar, driven by foreign fund inflows, mostly in domestic equities, dealers said. A weakness in the dollar index also supported the rupee, dealers said. 

"There were flows, mostly in equities, but later some importers also came in," a dealer with a state-owned bank said. "Market was very illiquid, so the movement was very quick today. Bid/ask gap was more." Some importers' dollar purchases capped gains for the Indian unit, dealers said.

After moving in a range of about 35 paise, the Indian currency settled at 84.2500 a dollar, sharply up from Friday's close of 84.4500 a dollar. The rupee moved between 84.1150 and 84.4600 a dollar during the day. Most other Asian currencies were also up, which supported the rupee, dealers said. Among the Asian currencies, the Taiwanese dollar rose 2.6%, the most, against the greenback.

After opening higher, the rupee continued to move upwards against the greenback, driven primarily by foreign banks' dollar sales. The banks sold dollars on behalf of clients who were looking to invest in India's stock market, dealers said. A UK-based bank was among the primary sellers of dollars in early trade, dealers said. The benchmark Nifty 50 and BSE Sensex closed 0.5% and 0.4% higher, respectively. Overseas investors made a net investment of $1.27 billion in Indian equities last month.

Driven by foreign banks' dollar sales, the rupee hit the day's high of 84.1150 a dollar within two hours of opening. A fall in the dollar index also supported the Indian currency, dealers said. The dollar fell on renewed tariff fears after US President Donald Trump Sunday announced 100% tariff on movies produced outside the country, saying the American film industry was struggling because other countries are offering incentives to attract filmmakers.

The dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 99.67 at 1530 IST, down from 100.04 Friday and 100.18 Thursday. The dollar index came down after having risen Friday following the release of better-than-expected US non-farm payrolls data for April. Non-farm payrolls in the US increased by 177,000, more than the 130,000 jobs expected in a poll by Reuters.

The rupee was also supported by a fall in crude oil prices, dealer said. As crude is a major item in Indian commodity imports, a fall in its price supports the rupee, as it reduces the country's import bill. Crude oil prices fell as the Organization of the Petroleum Exporting Countries and its allies agreed in a meeting Saturday to increase their oil output in June. The July Brent Crude contract on the Intercontinental Exchange was at $60.59 a barrel at 1530 IST, down from $61.29 per barrel Friday and $62.13 per barrel Thursday. It fell to as low as $59.08 per barrel earlier in the day.

While exporters were not very active in the morning, they sold dollars in the last hour of trading due to the relatively higher dollar/rupee levels, dealers said. The rupee fell below 84.40 a dollar in the last hour of trade. It was only at the opening that the rupee was below this level.

The fall in the Indian currency during the last hour was driven by increased dollar purchases by overseas investors and importers, who feared that relations between India and Pakistan could worsen in the days to come. This expectation was driven by reports of a missile test conducted by Pakistan, and of officials saying they were ready to defend the country against India.

FORWARDS

Dollar/rupee forward premiums ended lower Monday across tenors, primarily tracking a rise in benchmark US Treasury yields, dealers said. The one-year dollar/rupee forward premium fell to an over-one-week low Monday. Surplus banking system liquidity also pushed premiums lower.

The 10-year benchmark US Treasury yield rose 8 basis points Friday to settle at 4.33%, which pushed dollar/rupee forward premiums down. Forwards of a currency pair are reflective of the interest rate differential between two countries.

The dollar/rupee forward premiums were also lower Monday due to the liquidity surplus in the banking system, which increased to INR 1.58 trillion Friday from INR 1.25 trillion Thursday, before falling to INR 1.37 trillion Saturday.

However, some importers purchased forward dollars, noting a relatively lower dollar/rupee forward premium, which limited the fall in premiums, dealers said. The one-year exact period dollar/rupee forward premium fell to 2.19%, the lowest since Apr. 25.

At 1530 IST, the premium on the one-year exact-period dollar/rupee forward contract was 185.02 paise, against 192.40 paise Friday. On an annualised basis, the premium was at 2.20%, down from Friday's close of 2.28%.

OUTLOOK

On Tuesday, the rupee will track movements in the Chinese yuan and the dollar index. Market participants would keenly watch for any developments in India-Pakistan relations. Any deterioration may put the Indian currency under pressure, dealers said. The US dollar is expected to remain weak unless there are firm positive developments in US-China relations that indicate a potential fall in tariffs, market participants said.

A likely rise in the offshore Chinese yuan and other Asian currencies may also support the rupee, dealers said. Asian currencies are likely to be supported by expectations of an early trade deal by the US with some of the countries in the region.

Dealers expect importers to continue purchasing dollars, which may weigh on the rupee, dealers said. They also expect foreign fund inflows to continue supporting the rupee. During the day, the rupee is seen moving in a range of 83.80 and 84.50 a dollar.

Dealers peg the immediate resistance for the rupee at 84.10 a dollar. The currency is not seen rising above 83.80 a dollar, as dealers anticipate the Reserve Bank of India intervening by purchasing the greenback to lower the volatility.

India Rupee - World FX: Dollar index falls; Australian dlr hits 5-month high

NEW DELHI – The dollar index declined on Monday as a swift jump in the Taiwan dollar fuelled speculation that some Asian countries were ready to engineer revaluations of their currencies to gain US trade concessions. On Monday, the Taiwan dollar was up 2.6% against the dollar, adding to a record 4.5% jump on Friday. 

However, after the Taiwan dollar surged against the dollar, the country's government said tariff talks with the US last week did not discuss the exchange rate and Taiwan's central bank had not taken part in the discussions. At 1540 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 99.63, down from 100.04 Friday and 100.18 Thursday.

The Australian dollar jumped 0.9% against the greenback, hitting a five-month high, after Labor party leader and Australian Prime Minister Anthony Albanese secured a historic second three-year term in the 2025 federal election with a greater parliamentary majority. The Australian currency also gained tracking weakness in the dollar index. Tracking gains in the Australian unit, the New Zealand dollar was up 0.6% against the greenback. 

The euro rose 0.4% against the dollar after data released on Monday showed investor morale in the euro zone recovered more strongly than expected in May, though still at a low level. The Sentix index for the euro zone stood at -8.1 in May, against -19.5 in April, beating the forecast of a reading of -12.5.

The pound sterling was up 0.3% against the dollar, owing to a fall in the dollar index. Market participants now await the outcome of the US Federal Open Market Committe's meeting on Wednesday, when it is widely expected to leave rates unchanged.  (Pratiksha)

India Rupee: Premiums down as US ylds up; importers' fwd dlr buys limit fall

MUMBAI – Dollar/rupee forward premiums started the week lower across tenors, primarily tracking a rise in benchmark US Treasury yields, dealers said. The one-year dollar/rupee forward premium fell to an over one-week low Monday. Surplus banking system liquidity also pushed premiums lower.

"US yield is the major reason why forwards are down today, and I think 2.20% is the level it can go down before some paying comes in," a dealer with a state-owned bank said. 

The benchmark 10-year US Treasury yield rose 8 basis points Friday to settle at 4.33%, which pushed dollar/rupee forward premiums down. Forwards of a currency pair are reflective of the interest rate differential between two countries. After analysing data releases from the US last week, market participants were now waiting for the US Federal Open Market Committee's decision on Wednesday. They await the Fed's forward guidance on the US economy and rate cuts.

The dollar/rupee forward premiums were also lower Monday due to the liquidity surplus in the banking system, which increased to INR 1.58 trillion Friday from INR 1.25 trillion Thursday, before falling to INR 1.37 trillion on Saturday.

However, the fall in forward premiums was limited, as importers purchased forward dollars, noting a relatively lower dollar/rupee forward premium, dealers said. The one-year exact period dollar/rupee forward premium fell to 2.19%, the lowest since Apr. 25. Most dealers do not expect the one-year dollar/rupee forward premiums to fall and sustain below 2.20%, until at least the US FOMC's decision.

At 1434 IST, the premium on the one-year exact-period dollar/rupee forward contract was 185.02 paise, against 192.40 paise Friday. On an annualised basis, the premium was at 2.19%, against Friday's close of 2.28%.  (Sourabh Kumar)

 India Rupee: Trims some gains as importers buy dollars; FX inflows support

NEW DELHI – The rupee erased some gains against the dollar as banks bought the greenback on behalf of importers, who were looking to take advantage of the relatively lower dollar/rupee levels, dealers said. The rupee rose to a high of 84.1150 a dollar earlier in the day. 

"We are seeing good demand (for dollars) from importers. These are very good levels for them," said a dealer at a state-owned bank. "I think almost everyone will now start booking these levels, because one never knows when the tide may turn."

While most importers purchased the greenback in order to make the most of a falling dollar/rupee rate, some still stayed on the sidelines on expectation that the Indian unit may rise further, dealers said. The rupee rose past the psychologically-crucial 84.00 a dollar mark on Friday, touching a seven-month high, before closing lower at 84.5800 on the back of dollar purchases by importers and likely the Reserve Bank of India.

However, the RBI was missing in action on Monday, and did not intervene through dollar buys, supporting the Indian unit, according to dealers. "I don't think the RBI has intervened and will intervene around these levels. They will let the market settle around these levels for now," said a dealer at a private bank.

The rupee appreciated on Monday owing to dollar sales by foreign banks for foreign fund inflows into domestic equities, dealers said. In April, foreign portfolio investors infused $1.27 billion into the domestic stock market. A rise in other Asian currencies also boosted the Indian unit, they said. 

Broad based weakness in the dollar index also supported the local currency, according to dealers. The dollar declined on Monday as a rapid jump in the Taiwan dollar stoked speculation that some Asian countries were ready to engineer revaluations of their currencies to gain US trade concessions. The Taiwan dollar was up 2.6% against the dollar, adding to a record 4.5% jump on Friday. 

At 1400 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 99.79, down from 100.04 Friday and 100.18 Thursday. Market participants now await the outcome of the US Federal Open Market Committe's meeting, due on Wednesday, where it is widely expected to leave rates unchanged.

During the day, the rupee is seen moving between 84.00 and 84.60 against the dollar. Dealers see strong technical resistance at 84.00 a dollar.  (Pratiksha) 

India Rupee: Technical levels for rupee - May 5

MUMBAI – At 1121 IST, the rupee was at 84.2050 per dollar. At 0900 IST, the rupee was at 84.4500 a dollar, against the previous close of 84.5800. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Sourabh Kumar and Pratiksha)

India Rupee - Asia FX: Most up; Taiwan dollar surges over 3% against US dlr

MUMBAI – Most Asian currencies were up against the dollar early Monday due to a fall in the dollar index and on rising expectation of a US trade deal with some Asian nations. On Sunday, Trump indicated that he could strike trade deals with some of the countries as early as this week. This improved risk sentiment amongst investors.

The dollar index fell ahead of the US Federal Open Market Committee meeting and speeches by several Fed officials, all scheduled this week. The dollar index, which measures the strength of the greenback against a basket of six major currencies, was 99.73 at 0857 IST, down from 100.37 Friday and 100.18 Thursday.

The Taiwan dollar surged 2.7% against the greenback on expectation that Taiwan may soon seal a trade deal with the US. Data released last week showed a robust growth in the country's economy, which also supported the Taiwan dollar. The country's GDP rose 5.37% on year in the March quarter, as per advance estimates released last week. It was higher than Wall Street Journal poll's forecast of 3.2% growth.

The South Korean won was up 1.2% against the greenback on improved risk sentiment among investors regarding a trade deal with the US. A rise in the Korea Composite Stock Price Index also supported the won.

The Philippines peso was up 0.2% against the greenback, tracking a fall in the dollar index. The Malaysian ringgit rose 1.4% against the greenback. The Malaysian currency also received support on expectation that the country's central bank may keep the benchmark rates unchanged on Thursday. The Thai baht was up 0.3% against the greenback because of a weaker dollar index.  (Sourabh Kumar)

India Rupee: Sharply up on bks' dollar sales for FX flows; weak dlr supports

MUMBAI – The rupee opened sharply higher against the dollar as some foreign banks sold the greenback for foreign fund inflows into the domestic stock market, dealers said. A fall in the dollar index also supported the India currency, dealers said. 

"There are foreign banks who are selling (dollars), and mostly people are on the selling side only," a dealer with a state-owned bank said. A few foreign banks sold the greenback likely for overseas invesment in the domestic stock market, dealers said. The Nifty 50 and BSE Sensex were up 0.3% and 0.4% at 0924 IST. 

Other Asian currencies were higher against the dollar Monday, which also supported the Indian currency, dealers said. The dollar index fell ahead of the US Federal Open Market Committee's meeting decision, due Wednesday. The dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 99.75 at 0931 IST, down from 100.04 Friday and 100.18 Thursday.

A fall in crude oil prices also supported the rupee, dealers said. Given that crude is a major imported item for India, a fall in its price reduces the import bill of the nation, thus supporting the rupee. Crude oil prices fell Monday as the Organization of the Petroleum Exporting Countries and its allies agreed in a meeting Saturday to increase their oil output in June. The July Brent crude contract on the Intercontinental Exchange fell as low as $59.08 per barrel from $61.29 per barrel Friday and $62.13 per barrel Thursday.

While a few importers purchased the greenback, which capped the gains for the rupee, most others waited for the Indian currency to rise further before buying dollars in a large quantum, dealers said. Apart from importers, the Reserve Bank of India may also intervene in the currency market to contain the extreme volatility, dealers said. "I think 83.80 would be capped today (Monday), because RBI may come in," a dealer with a private sector bank said.

Noting a sharp rise at open, some exporters also sold the greenback, which lifted the rupee, dealers said. Most market participants are also expected to sell their dollar holdings, should the Indian currency keep moving higher, dealers said. This is expected to push the rupee further up, they said. During the day, the rupee is seen moving between 83.80 and 84.50 against the dollar. Dealers see strong technical resistance at 84.95 a dollar.  (Sourabh Kumar)

India Rupee: Expected range for rupee - May 5

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 Pratiksha)

End

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

Edited by Rajeev Pai

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