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Informist, Tuesday, May 13, 2025

 

By Gowri Lakshmi

 

MUMBAI – The rupee pared almost all of its early gains on Tuesday as foreign portfolio investors, who withdrew funds from the Indian financial markets, purchased dollars, dealers said. Importers also bought dollars persistently, which further weighed on the Indian unit, dealers said. The rupee still ended slightly up compared to its previous close as exporters sold dollars.

 

"Significant outflows from equity (market) were there today... investors were profit booking and getting out of the country given the uncertainty with India-Pakistan relations," a dealer at a private-sector bank said. "There have been outflows from other markets as well, including the debt (government bond) market."

 

The rupee came off the day's high of 84.6250 to close at 85.3300, slightly higher from 85.3700 on Friday. Indian money markets were closed on Monday for Buddha Purnima. The low for the day was 85.4700. Most other Asian currencies ended on a mixed note as investor sentiment improved after the US and China agreed to suspend most of the tariffs on goods import from each other. The Philippine peso was the worst hit in the Asia-Pacific region while the Thai baht was the best performing currency.

 

The rupee began the day sharply higher at 84.6250 a dollar, after India and Pakistan on Saturday reached an understanding and ceased military action against each other. India Wednesday struck terrorist camps in Pakistan occupied Kashmir and Pakistan, in response to the terrorist attack in Pahalgham last month that killed 26 civilians. On Monday, Prime Minister Narendra Modi, in his address to the nation, said India will continue to observe Pakistan's moves and take necessary punitive measures if they violate the understanding. He reiterated India will not tolerate any "nuclear blackmail" from Pakistan.

 

Rise in the offshore Chinese yuan after the US and China paused tariffs for 90 days also supported the rupee early in the trade. China and the US agreed to slash import duties from 125% to 10%. Import duty on China now stands at 30%, as the 20% import duty relating to fentanyl remains unchanged.

 

Following de-escalation in the tariff war between the US and China, the dollar index hit a high of 101.98 on Monday, the highest level since Apr. 10. On Tuesday, the index remained broadly strong during the day due to improved investor sentiment, dealers said. At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 101.56 against 101.78 Monday and 100.42 Friday. 

 

However, gains of the rupee were quickly capped as a few importers rushed to purchase dollars to take advantage of the relatively lower dollar/rupee levels, dealers said. Most importers remained on the sidelines anticipating the Indian unit to rise further, dealers said. However, dollar demand from importers and the FPI outflows prevented the rupee from rising further. A sharp fall in benchmark stock indices, the Nifty 50 and BSE Sensex, also weighed on the rupee. 

 

On Tuesday, the Indian army killed three 'hardcore terrorists' in Jammu & Kashmir's Shopian area, the Additional Directorate General of Public Information said in a post on X. This likely triggered panic dollar-buying amongst importers pushing the rupee to the day's low, according to some dealers.

 

However, as soon as the rupee fell below the 85-a-dollar level, some exporters sold dollars, which prevented the rupee from falling further, dealers said. "In the morning exporters were in wait-and-watch mode but around 85.10-85.15 (a dollar) exporters actively sold dollars while others waited to see if it (rupee) will fall further," the dealer at the private-sector bank said. 

 

	AT 1530 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	85.3300	84.6250	84.6250	85.4700	85.3700
1-year dlr/rupee fwd (paise)	185.25	183.75	187.25	182.75	196.03

 

FORWARDS

The one-year dollar/rupee forward premium ended sharply down tracking a jump in US Treasury yields on Monday, dealers said. Forwards of a currency pair are reflective of the interest rate differential between the two countries.

 

Further, banks sold dollars for forward delivery, noting arbitrage between the onshore forwards and offshore non-deliverable forwards rates, which also weighed on premiums, according to dealers. However, the fall in forward premiums was limited as some banks bought dollars for forward delivery on behalf of importers, noting the relatively lower levels and an appreciation in the spot rupee, dealers said.

 

The one-year dollar/rupee forward premium fell to a low of 2.16% earlier in the day, while the Indian currency rose to a high of 84.6250 a dollar. At 1530 IST, the one-year exact-period dollar/rupee forward premium was 185.25 paise, against 196.03 paise Friday. On an annualised basis, the premium was at 2.17%, against Friday's 2.30%.

 

OUTLOOK 

On Wednesday, the rupee will take cues from any developments between India and Pakistan, dealers said. Any news relating to further de-escalation between US-China trade relations will also impact the Indian currency market, dealers said. The rupee will also closely track movements of the dollar index and offshore Chinese yuan, dealers said.

 

Dealers expect importers to continue buying dollars, fearing a further fall of the Indian unit, dealers said. They also expect overseas investors to withdraw funds from the Indian financial markets, which may further weigh on the rupee, dealers said. However, if the rupee breaches the key level of 85.50 a dollar, dealers expect exporters to sell dollars, which may limit the fall of the rupee.

 

During the day, the rupee is seen moving between 85.00 and 85.70 against the dollar. Dealers see strong technical support for the rupee at 85.50 against the greenback.

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India Rupee - World FX: Australian dollar up as US-China trade war de-escalates

 

	AT 1443 IST	HIGH	LOW	PREVIOUS
GBP/USD	1.3209	1.3217	1.3170	1.3167
EUR/USD	1.1107	1.1125	1.1090	1.1087
NZD/USD	0.5890	0.5899	0.5847	0.5853
AUD/USD	0.6407	0.6420	0.6362	0.6367
USD/JPY	148.0110	148.4510	147.6500	148.3730
USD/CAD	1.3990	1.3993	1.3959	1.3972
EUR/JPY	164.4100	164.6590	164.1390	164.4730
CHF/USD	1.1889	1.1911	1.1823	1.1808
EUR/CHF	0.9342	0.9381	0.9332	0.9373

 

MUMBAI – The Australian dollar jumped 0.5% against the US dollar Tuesday after the US and China de-escalated their trade stand-off. On Monday, both countries agreed to waive the import duties levied on each others' goods for 90 days, slashing tariffs from 125% to 10%. However, the 20% import duty relating to fentayl is still in place, taking the total tariffs on China to 30%.

 

"We have reached an agreement on a 90-day pause and substantially move down the tariff levels," US Treausury Secretary Scott Bessent said. "Both sides on the reciprocal tariffs will move their tariffs down 115%." Following the move, the dollar index, which measures the strength of the dollar against a basket of six major currencies, touched its highest level in over one month at 101.98. At 1443 IST, the dollar index was at 101.58, down from 101.78 Monday but up from 100.42 Friday.

 

The Australian currency also rose after the Westpac Consumer Confidence Index rebounded in May due to improved investor risk sentiment. The consumer sentiment index rose by 2.2% to 92.1 this month from 90.1 in April. Tracking gains in the Australian currency, the New Zealand dollar was up 0.6% against the greenback. Any change in the Australian economy directly impacts the New Zealand currency due to their close bilateral trade relations.

 

The Japanese yen rose 0.3% against the US currency as optimism around further interest rate hikes by the Bank of Japan prevailed. The BoJ continues to anticipate wages and prices to rise despite uncertainties on the geopolitical front, Deputy Governor Shinichi Uchida said Tuesday. "Japan's underlying inflation and medium- to long-term inflation expectations are likely to temporarily stagnate. But even during that period, wages are expected to continue rising as Japan's job market is very tight," Uchida said.

 

The pound sterling was up 0.2% against the greenback. However, gains in the currency were capped as the UK's unemployment rate rose to its highest level in almost four years amid a slowdown in the job market. Data published Tuesday showed the unemployment rate was at 4.5% in Jan-Mar, up 0.2% from the previous quarter. 

 

The euro rose 0.1% against the greenback. The ZEW Economic Sentiment for the eurozone stood at 11.6 in May, well above the market expectations of a 3.5 fall. The Canadian dollar was down 0.1% against the greenback while the Swiss franc rose 0.6% against the greenback. Market participants now await the US inflation data for April due later in the day.  (Gowri Lakshmi)

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India Rupee: Off highs as importers buy dollars, local equities fall sharply

 

	AT 1340 IST	AT 0900 IST	HIGH	LOW	PREVIOUS (AT 1530 IST)
Spot rupee per $1	85.2000	84.6250	84.6250	85.2100	85.3700

 

MUMBAI – The rupee erased a significant portion of its early gains against the dollar and moved sharply below the 85-per-dollar mark as banks continuously purchased dollars on behalf of importers, dealers said. A sharp fall in the domestic stock market also weighed on the Indian unit, dealers said. The rupee rose to a high of 84.6250 a dollar in early trade.

 

"Importers are active, they have been booking profits since morning," a currency trader at a brokerage firm said. "While some did wait for the rupee to rise further, it did not happen and most (importers) have begun purchasing (dollars) now." 

 

The rupee surged against the dollar in early trade as investors' risk sentiment improved after India and Pakistan agreed to a ceasefire on Saturday, allaying concerns of a full-blown war between the two nuclear-powered nations. Noting the sharp rise in the currency, importers actively bought dollars, which weighed on the rupee, dealers said.

 

The rupee was also weighed down by a sharp fall in the domestic equity market, dealers said. At 1402 IST, the benchmark stock indices, the Nifty 50 and BSE Sensex were down 1.3% and 1.5%, respectively. Dealers said some banks bought dollars, likely on behalf of foreign portfolio investors looking to pull out funds from local equities. 

 

However, some banks sold dollars on behalf of a few exporters, who expect further rise in the Indian unit in the near term, partially aiding the domestic unit, dealers said. "Given that the rupee went till 84.60 levels, exporters should likely come at near 85 (a dollar) levels," the currency trader said. 

 

The dollar index remained broadly strong due to improved investor sentiment after the US and China de-escalated the trade stand-off between them, dealers said. At 1404 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 101.58, against 101.78 Monday and 100.42 Friday. 

 

"The rupee should hold (at) current levels and trade within the 85.00-85.50 a dollar in the near term," the currency trader at the brokerage firm said. During the day, the rupee is seen moving between 84.80 and 85.40 against the dollar. Dealers see strong technical support for the rupee at 85.30 against the greenback.  (Gowri Lakshmi)

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 India Rupee: Premium falls on jump in US yields, onshore-offshore arbitrage

 

	AT 1315 IST	AT 0900 IST	HIGH	LOW	PREVIOUS (AT 1530 IST)
Spot rupee per $1	85.0625	84.6250	84.6250	85.1475	85.3700
1-year dlr/rupee fwd (paise)	185.25	183.75	185.25	182.75	196.03

 

NEW DELHI – The one-year dollar/rupee forward premium fell sharply tracking a jump in US Treasury yields on Monday, dealers said. Forwards of a currency pair are reflective of the interest rate differential between the two countries. 

 

"US yields have seen a significant upward move over the long weekend. So, a lot of recieving is coming from that," said a dealer at a foreign bank. The benchmark 10-year US Treasury yield jumped 8 basis points Monday after the US and China agreed to suspend most of the reciprocal tariffs on goods imported from each other for 90 days, effective Wednesday. 

 

Following talks in Geneva over the weekend, both sides agreed that the US would slash levies on Chinese imports to 30% from 145% during a 90-day negotiation period and China would cut duties to 10% from 125%. The positive outlook on US-China trade relations has led traders to pare bets of rate cuts by the Federal Reserve on expectation that policymakers will likely be under less pressure to ease rates to support growth. 

 

Further, banks sold dollars for forward delivery, noting arbitrage between the onshore forwards and offshore non-deliverable forwards rates, which also weighed on premiums, according to dealers. "Offshore forward points have come lower after the news of India-Pakistan ceasefire. I think onshore forwards will also be on the lower side, if positive news on that front continues," said a dealer at a private bank. 

 

Investors' risk sentiment improved after India and Pakistan agreed to a ceasefire on Saturday. Although there were violations of the ceasefire in the immediate aftermath, the truce has held since then, allaying concerns of a full-blown war between the two countries. 

 

However, losses in the forward premium were limited as some banks bought dollars for forward delivery on behalf of importers, noting the relatively lower levels and an appreciation in the spot rupee, dealers said.  The one-year dollar/rupee forward premium fell to a low of 2.16% earlier in the day, while the Indian currency rose to a high of 84.6250 a dollar. 

 

Market participants now await the release of the US and India inflation prints, due later in the day, for more cues on the future rate trajectory of both the countries. At 1315 IST, the one-year exact-period dollar/rupee forward premium was 185.25 paise, against 196.03 paise Friday. On an annualised basis, the premium was at 2.18%, against Friday's 2.30%.  (Pratiksha)

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India Rupee: Technical levels for rupee - May 13

 

MUMBAI – At 1050 IST, the rupee was at 84.8625 per dollar. At 0900 IST, the rupee was at 84.6250 a dollar, against the previous close of 85.3700. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

 

Participants	S2	S1	R1	R2
State-owned bank	85.25	84.95	84.75	84.60
State-owned bank	85.29	85.07	84.53	84.42
Private sector bank	85.60	85.50	84.40	84.30

 

(Gowri Lakshmi and Pratiksha)

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India Rupee: Surges as India-Pak tensions ease; importer dlr buys cap gains

 

	AT 0954 IST	AT 0900 IST	HIGH	LOW	PREVIOUS (AT 1530 IST)
Spot rupee per $1	84.8925	84.6250	84.6250	84.9050	85.3700

 

MUMBAI – The rupee surged against the dollar Tuesday as India-Pakistan tensions de-escalated, dealers said. However, gains of the Indian currency were capped as a few importers purchased the greenback, dealers said. "India-Pak ceasefire is the sole reason the rupee has surged today (Tuesday). The outlook for rupee remains same, it is likely to move in an upward direction," a dealer at a state-owned bank said. 

The rupee was supported as India and Pakistan agreed to a ceasefire on Saturday after four days of military retaliation. India hit Pakistan with air strikes and missiles last Wednesday, in retaliation to the Pahalgam terrorist attack on Apr. 22, triggering the decades-old rivalry. Prime Minister Narendra Modi, in his first address to the nation after 'Operation Sindoor', Monday said the military operations are still on and that India will observe Pakistan's moves in the coming days. He also reiterated that India will not give in to Pakistan's 'nuclear blackmails'. However, some media reports said there was a violation of ceasefire by Pakistan on Monday after Modi's speech, drones were seen and explosions were heard in parts of Jammu & Kashmir and Punjab. 

 

A rise in the offshore Chinese yuan also supported the rupee, dealers said. In early trade, the offshore Chinese yuan rose 0.2% against the greenback after the US and China agreed to suspend most of its import duties on each other and paused tariffs for another 90 days, boosting investor sentiment, dealers said. 

 

However, noting the sharp rise in the rupee, a few importers purchased the greenback, dealers said. This limited the rise of the rupee, dealers said. "Importers aren't there majorly, most of them are still hoping it (rupee) will rise further while a few of them bought at these levels," the dealer at the state-owned bank said. 

 

During the day, the rupee is seen moving between 84.50 and 85.00 against the dollar. Dealers see strong technical resistance at 84.60 a dollar.  (Gowri Lakshmi)

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India Rupee - Asia FX: Mixed; Chinese yuan up after US-China trade truce

 

MUMBAI – Asian currencies traded mixed Tuesday as investor sentiment improved after the US and China agreed on a truce and decided to cut tariffs on each other's imported goods for 90 days. Both the economic superpowers Monday agreed to suspend most tariffs, in a move to de-escalate a full-fledged global trade war. The reciprocal tariffs between both countries will be reduced from 125% to 10%. However, the 20% duty by the US on Chinese imports relating to fentanyl remain in place, bringing the total tariffs on China at 30%. 

 

Following the truce, the offshore Chinese yuan rose 0.2% in early trade. The dollar index retreated slightly in early trade due to strength in the euro and Japanese yen. At 0854 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies was at 101.63, down from 101.78 Monday but up from 100.42 Friday. The index hit an over one-month high of 101.98 on Monday. 

 

The Malaysian ringgit was the worst-hit currency in early Asian trade, falling 0.7% against the US currency. However, losses in the Malaysian currency were limited tracking gains in the domestic stock market. At 0859 IST, the benchmark Kuala Lampur Composite Index was up 2.0%. The Indonesian rupiah was up 0.1% against the greenback. 

 

The South Korean won was up 0.1%. The presidency campaigns in the country began on Monday. Contenders pledged to unify the 'deeply polarised' society and spur economic growth amid ongoing trade negotiations with the US. South Korea will hold the presidential election on Jun. 3 to decide Yoon Suk Yeol's successor.

 

The Taiwan dollar was down 0.2% while the Philippine peso traded 0.3% lower against the greenback. The Thai baht was flat against the US currency. Bank of Thailand Governor Sethaput Suthiwartnarueput Tuesday cautioned against key structural issues that may undermine the country's growth potential. "The first phase is marked by heightened uncertainty, followed by a decline and bottoming out, then a recovery, with the fourth phase referred to as the aftershock period. This final stage is when the structural problems must be addressed," Sethaput said.  (Gowri Lakshmi)

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India Rupee: Expected range for rupee - May 13

 

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:

 

PARTICIPANT	SUPPORT	RESISTANCE
Foreign bank	85.50	84.70
Private sector bank	85.50	84.30
Brokerage firm	85.40	84.30
Brokerage firm	85.30	84.60
Brokerage firm	85.25	84.40
Brokerage firm	84.90	84.60

 

 

 

 

 

 

 

 

 

(Pratiksha and Gowri Lakshmi)

 

End

 

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

 

Edited by Ashish Shirke

 

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