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Informist, Tuesday, May 6, 2025

By Pratiksha

NEW DELHI – The rupee ended sharply lower against the dollar on Tuesday but erased a significant portion of its early losses as banks continuously sold the greenback on behalf of exporters, dealers said. The Indian unit was weighed down by banks' dollar purchases for oil marketing companies and other importers and a fall in the offshore Chinese yuan, they said.  

"Initially, there were just a lot of bids (dollar buys) in the market, but after fix (reference rate fixing window), selling (of dollars) came in," said a dealer at a state-owned bank. "Market sentiment is changing every day. Exporters had to come in at some level." 

After hitting a low of 84.6325 a dollar during the day, the rupee settled at 84.4325 on Tuesday, against 84.2500 on Monday. The Indian currency moved in a range of 37 paise during the day.

The Indian unit started the day slightly weaker, tracking a fall in most other Asian currencies, dealers said. Most Asian currencies were down early Tuesday as investors assessed the possibility of a trade deal between the US and its trading partners. The offshore Chinese yuan was down about 0.3% against the dollar in early trade after data showed growth in the country's services sector had slowed in April amid tariffs on its exports to the US. The Caixin services purchasing managers' index fell to 50.7 last month, down from 51.9 in March. 

Shortly after opening, some banks rushed to buy dollars on behalf of some oil marketing companies and other importers on the expectation that the local unit may depreciate further in the near term, dealers said. However, some importers remained on the sidelines in expectation that the Indian unit may again rise above the psychologically-crucial 84.00 a dollar mark, they said. The rupee rose past the 84.00-per-dollar level on Friday, touching a seven-month high, before closing lower.  

"Importer demand is going to stay, even if not a lot. These rupee levels importers would not have imagined even a week back, so, of course, they will book around these levels," said a dealer at a private sector bank. 

Some foreign and private sector banks also bought the greenback for foreign fund outflows from domestic equities amid fear of escalation in tensions between India and Pakistan after the Ministry of Home Affairs Monday ordered a nationwide civil defence mock drill on Wednesday.

Following this, the Indian unit fell to the day's low of 84.6325 a dollar. The Nifty 50 and BSE Sensex ended 0.3% and 0.2% lower, respectively, on Tuesday.

However, shortly afterwards, some banks stepped in to sell dollars on behalf of exporters, who wanted to take advantage of the relatively higher dollar/rupee levels, which helped the Indian unit erase a significant portion of its losses, dealers said. 

"Exporters came in around 84.60-84.50. These seem like the levels for them for now," said a dealer at another state-owned bank. "Exporters are a bit spooked with all the appreciation (in rupee) that has happened recently." The domestic currency has risen 3.5% against the dollar since March. 

Weakness in the dollar index also supported the Indian currency, according to dealers. The dollar index remained weak on Tuesday as investors are worried about the uncertainty of US President Donald Trump's tariff policies and their impact on the economy's growth. The dollar index was also under pressure as the Taiwan dollar's record jump in recent sessions has fuelled speculation that a revaluation of regional currencies was possible to win US trade concessions. 

At 1530 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was 99.70, down from 99.78 Monday and 100.04 Friday.

FORWARDS

The one-year dollar/rupee forward premium ended at a near two-week low on Tuesday due to a rise in the benchmark US Treasury yield, dealers said. Forwards of a currency pair are reflective of the interest rate differential between the two countries.

"Forwards are mostly tracking US yields. The comfortable liquidity situation is also dragging premiums," said a dealer at a foreign bank. "I think forwards will continue to be on the downward side in the near term."

However, volume was lower than usual as most traders refrained from taking large positions before the rate decision of the US Federal Open Market Committee, which will be out Wednesday. The US FOMC is expected to keep the benchmark rate unchanged. 

At 1530 IST, the one-year exact-period dollar/rupee forward premium was 2.18%, against 2.20% Monday. On absolute basis, the premium was 184.23 paise, against 185.02 paise Monday.

OUTLOOK

On Wednesday, the rupee will take cues from movement in the dollar index and Chinese yuan, dealers said. The local unit will also take cues from movement in crude oil prices, they said. 

Market participants now await US Treasury Secretary Scott Bessent's testimony at a hearing of the House Committee on Appropriations later in the day. It could provide some indications of the progress of trade talks. Market participants will also be watchful of any further developments related to the India-Pakistan conflict.

Dealers expect banks to continue selling dollars for exporters on the expectation that the rupee may rise in the coming days, supporting the local unit, dealers said.

During the day, the rupee is seen moving in a range of 84.10 and 84.80 a dollar. They peg immediate technical support for the rupee at 84.80 a dollar.

India Rupee - World FX: Dollar remains weak on growth worries; euro up 0.2%

NEW DELHI – The dollar remained weak against other major currencies on Tuesday as investors are worried about the uncertainty of US President Donald Trump's tariff policies and their impact on the economy's growth. Trump on Monday announced a 100% tariff on movies produced outside the country, saying the American movie industry was dying a "very fast death" due to the incentives that other countries were offering to lure filmmakers.

The US currency was also under pressure as the Taiwan dollar's record jump in recent sessions has fuelled speculation that a revaluation of regional currencies was possible to win US trade concessions. At 1500 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was 99.73, down from 99.78 Monday and 100.04 Friday. Market participants are now waiting for the outcome of the US Federal Open Market Committee's meeting on Wednesday. The US central bank is widely expected to leave rates unchanged at the meeting.

The euro rose 0.2% against the dollar after Eurozone's purchasing managers' index for April showed the region's economy in expansion territory, although at a slower pace. The HCOB Eurozone Composite PMI Output Index, compiled by S&P Global, fell to 50.4 in April from 50.9 in March. The reading was only just above the 50 mark separating growth from contraction.

The pound sterling was also up 0.2% against the greenback ahead of the Bank of England's policy meeting on Thursday, where it is expected to lower interest rates by a quarter point as Trump's tariffs have dampened the global growth outlook.

The Japanese yen and the New Zealand dollar were up 0.2% and 0.3% against the US unit, respectively, tracking weakness in the US currency. (Pratiksha)

India Rupee:Premium hits near 2-wk low as US yield rises; overall volume low

MUMBAI – The one-year dollar/rupee forward premium hit a near two-week low on Tuesday due to a rise in the benchmark US Treasury yield, dealers said. Some banks purchased forward dollars, limiting the fall, dealers said. But most market participants refrained from entering the market with large volumes, waiting for further indications on the health of the US economy, dealers said. 

The benchmark 10-year US Treasury yield rose slightly on Monday to settle at 4.36%, up 3 basis points from Friday. This brought premiums down in early trade, dealers said. Forwards of a currency pair are reflective of the interest rate differential between the two countries.

"Like spot, volumes here are also less, and that is why some movement. But people are waiting for any commentary on trade deals and then FOMC decision," a dealer with a state-owned bank said.

Market participants await US Treasury Secretary Scott Bessent's testimony at a hearing of the House Committee on Appropriations later in the day. It could provide some indications of the progress of trade talks with countries. The rate decision of the US Federal Open Market Committee, which will be out Wednesday, is also awaited. The US FOMC is expected to keep the benchmark rate unchanged. 

At 1318 IST, the one-year exact-period dollar/rupee forward premium was 2.19%, little changed from 2.20% Monday. On an absolute basis, the premium was 184.80 paise, only slightly lower than 185.02 paise Monday.  (Sourabh Kumar)

India Rupee:Sharply dn on importer, FPI dlr buys amid India-Pakistan tension

MUMBAI – The rupee was sharply down against the dollar amid lower-than-usual volumes as banks bought dollars for importers and foreign fund outflows, dealers said. The rupee also came under pressure on fear of escalation of India-Pakistan tensions after the Ministry of Home Affairs Monday ordered a nationwide civil defence mock drill on Wednesday, taking into account "new and complex threats" in the "current geo-political scenario". 

"There is an underlying panic in the market because of last evening's news of drill," a dealer at a brokerage firm said. "Volumes are also less today." After opening slightly lower against the greenback, the Indian currency continued to fall.

At open, a few importers purchased the greenback followed by some dollars purchases for foreign fund outflows from the domestic stock market, dealers said. The Nifty 50 and BSE Sensex were down 0.3% each at 1244 IST. Fears of escalation in tensions between India and Pakistan led to foreign fund outflows from the domestic equities, dealers said.

Due to continuous dollar purchases, the rupee hit the day's low of 84.6325 a dollar. The fall was limited as exporters sold dollars at relatively higher dollar/rupee levels, dealers said. The dollar index was little changed. The index, which measures the strength of the greenback against a basket of six major currencies, was 99.70 at 1245 IST, down from 99.78 Monday and 100.04 Friday. 

During the day, the rupee is seen moving between 84.20 and 84.70 against the dollar. Dealers see strong technical support at 84.65 a dollar.  (Sourabh Kumar)

India Rupee: Technical levels for rupee - May 6

MUMBAI – At 1108 IST, the rupee was at 84.5375 per dollar. At 0900 IST, the rupee was at 84.2800 a dollar, against the previous close of 84.2500. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Sourabh Kumar)

India Rupee:Down on importers' dlr buys; overall volumes thin in early trade

MUMBAI – The rupee was down against the dollar early Tuesday, as some importers, including oil marketing companies, purchased the greenback, dealers said. Most importers, however, were waiting for the rupee to rise to near 84.10 a dollar before buying the greenback in large quantum, dealers said. 

They said overall volumes in the market were lower than usual as market participants awaited more clarity on the directional move of the rupee, and this somewhat exaggerated the dollar/rupee movement.

"I am not seeing anyone taking any significant trading positions," a dealer with a state-owned bank said. "Nobody is expecting the rupee will fall for now, and there are parrticipants on both the sides."

The dollar index was broadly steady, with little movement in early Indian trade. The index, which measures the strength of the greenback against a basket of six major currencies, was 99.81 at 0937 IST, against 99.78 Monday and 100.04 Friday.  Market paricipants await US Treasury Secretary Scott Bessent's testification at a House Appropriations Committee hearing later in the day, as this could provide some indications of progress in trade talks with countries.

"There is some positivity expected from Bessent for the rupee, as the dollar may weaken further if there is some concrete information on trade talks," the dealer with the state-owned bank said. 

Some exporters also sold the greenback, dealers said. Most exporters are expected to sell dollars only when the rupee falls to around 84.50 a dollar.

On Monday, the Ministry of Home Affairs ordered a nationwide civilian mock drill on May 7. The news had a bearing on the government bond market, with prices falling in early trade Tuesday. Foreign exchange dealers said they were still assessing whether the news would have an impact on the foreign exchange market. "People are still assessing if the drill is going to affect the relations and hence have any bearing on the market," a dealer with another state-owned bank said.

During the day, the rupee is seen moving between 84.15 and 84.45 against the dollar. Dealers see strong technical support at 84.45 a dollar.  (Sourabh Kumar)

India Rupee - Asia FX: Most units down; mkt awaits clarity on US trade deals

MUMBAI - Most Asian currencies were down against the dollar early Tuesday. Market participants currently await more clarity on trade talks between the US and its trading partners, especially with China. Last week, US President Donald Trump hinted at the possibility of a trade deal with a few countries this week itself, which provided a boost to investors' sentiment towards some of the Asian economies.

The dollar index, which measures the strength of the greenback against a basket of six major currencies, was 99.85 at 0838 IST, down from 99.78 Monday and 100.04 Friday. Market participants keenly await US Treasury Secretary Scott Bessent's testimony at House Committee on Appropriations' hearing, later in the day. It could provide market participants with some indications of progress in trade talks with countries.

The Taiwan dollar was down 0.5% against the greenback after having risen over 4% Monday. It weakened a day after the country's central bank urged market participants not to speculate on the currency movement. The South Korean won slipped 0.8% against the US currency. Markets in South Korea are closed Tuesday. 

The Philippines peso was down 0.1% after data showed the country's inflation eased in April, boosting chances of rate cuts by the central bank in its upcoming meetings. Philippines headline consumer price index rose 1.4% on year in April compared to the 1.8% rise in March. Inflation last month was also lower than the projected 1.8% in a poll by Wall Street Journal.

The Indonesian rupiah was down 0.2% against the greenback after data released Monday showed the country's economic growth slowing down to 4.87% on year in the March quarter, below the estimate of 4.92% in a Bloomberg survey. 

The Malaysian ringgit fell 0.8% against the greenback. Market participants now keenly await the rate decision by the country's central bank Thursday. A poll by Reuters showed that Bank Negara Malaysia may keep the benchmark rate unchanged. 

The Thai baht fell 0.1% against the US currency after Thailand's inflation declined in April. Data released Tuesday showed the consumer price index fell 0.22% on year last month, below March's figure of 0.84%.  (Sourabh Kumar)

India Rupee: Expected range for rupee - May 6

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, Pratiksha, 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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