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Informist, Thursday, May 15, 2025

By Sourabh Kumar

MUMBAI – The rupee ended the day sharply lower against the dollar as banks purchased the greenback for foreign fund outflows, dealers said. However, the fall of the Indian currency was limited due to a likely intervention by the Reserve Bank of India, dealers said. Coupled with some banks' dollar sales, likely on behalf of the central bank, exporters also sold the greenback, which prevented the rupee from falling sharply, dealers said.

"They (RBI) were present above 85.70, but there was a lot of buying from foreign banks and state-owned banks," a dealer with a foreign bank said. After moving in a range of 26 paise, the rupee settled at 85.5500 Thursday. On Friday, the Indian currency had closed at 85.2700 a dollar.

The movement in the Indian rupee quite was in contrast with those of its Asian peers. While the rupee fell 0.3%, other Asian currencies rose in the range of 0.1% to 0.3% against the dollar Thursday, with the South Korean won performing the best. Majority of other Asian currencies rose due to a fall in the dollar index.

The rupee even opened lower against the dollar Thursday, at 85.5175, due to demand for dollars from foreign banks, likely for their overseas clients, who most likely wanted to pull their money out of Indian equities, dealers said. After falling in the day, the Nifty 50 and BSE Sensex reversed their movement and ended over 1% higher Thursday.

Not only foreign banks, state-owned banks were also the major buyers of dollars Thursday, according to dealers. A lot of their dollar purchases were related to payment obligations for defence equipment, as per dealers. "There has been these defence related payments (dollar buying) for quite some time now, and then some infrastructure companies also purchased dollars," a dealer at another foreign bank said. Banks also purchased the greenback on behalf of some oil marketing companies, which weighed on the rupee, dealers said.

While crude oil prices fell Thursday, oil marketing companies bought the greenback on fears that prices may rise again, dealers said. Oil prices fell due to an unexpected rise in inventories in the US last week. Data from Energy Information Administration showed crude stockpiles rising 3.5 million barrels in the week ended Friday to 441.8 million barrels. Crude oil prices may move higher after the US announces trade deal with more countries, dealers said. The July Brent Crude contract on the Intercontinental Exchange was at $63.78 per barrel at 1530 IST, down from $66.09 per barrel Wednesday, and $66.63 per barrel Tuesday.

Most importers did not purchase dollars, hoping for the rupee to rise, dealers said. Importers are likely to buy dollars only when the rupee rises above 85.10 a dollar, a dealer with a state-owned bank said.

Under pressure from dollar purchases, primarily from foreign banks, the rupee hit the day's low of 85.7300 a dollar, the lowest in about a week. It is around this level that the Reserve Bank of India is likely to have intervened in the foreign exchange market by selling dollars, dealers said. It prevented the rupee from falling further, dealers said. 

Sensing the presence of the central bank, exporters also sold the greenback at relatively higher dollar/rupee levels, as they did not expect the rupee to fall more during the day, dealers said. Due to dollar sales, likely by the central bank and by exporters, the rupee hit the day's high of 85.4700 a dollar. 

An ease in the dollar index also supported the rupee, dealers said. The dollar index, which measures the strength of the greenback against a basket of six major currencies, was 100.77 at 1530 IST, down from 101.02 Wednesday and 100.93 Tuesday. The dollar weakened ahead of the release of US weekly unemployment insurance claims, Producer Price Index for April, and advanced monthly retail sales data for April, all of which are scheduled to be released later in the day.

FORWARDS

The one-year dollar/rupee forward premium ended higher Thursday as a few banks purchased forward dollars to take advantage of the arbitrage opportunity between onshore forward premiums and offshore non-deliverable forward premiums, dealers said. However, a rise in the benchmark US Treasury yield limited the upqard movement of premiums, dealers said.

The benchmark 10-year US Treasury yield rose 4 basis points to settle at 4.53% Wednesday. This capped the rise in dollar/rupee forward premiums, dealers said. Forwards of a currency pair are reflective of the interest rate differential between two countries.

A rise in the banking system liquidity surplus also limited the upward movement in forward premiums, dealers said. On Wednesday, the Reserve Bank of India had net absorbed INR 1.84 trillion from the banking system, higher than INR 1.54 trillion Tuesday.

The dollar/rupee forward premium is expected to remain lower because of a higher chances of rate cuts in India, dealers said. However, there is uncertainty on the exact level as market participants await clarity on the interest rate movement in the US. At 1530 IST, the one-year exact-period dollar/rupee forward premium settled at 182.48 paise, up from 180.65 paise Wednesday. On an annualised basis, the premium ended at 2.13%, up from Wednesday's 2.11%.

OUTLOOK 

On Friday, the rupee will take cues from the movement in the dollar index and the offshore Chinese yuan, dealers said. Market participants await the release of the US retail sales data, producer price index for April and the weekly initial jobless claims data, to better gauge the health of the US economy. 

Movements of crude oil prices will also be closely tracked, and any rise may prompt oil marketing companies to purchase dollars in higher quantities, which can weigh on the rupee, dealers said. Further, while most importers are likely to wait, they may purchase dollars, should the Indian currency fall sharply and trades near 86.00 a dollar. 

However, the RBI is expected to intervene in the currency market by selling dollars, which may prevent the rupee from falling sharply, dealers said. During the day, the rupee is seen moving in a range between 85.00 and 85.80 a dollar. Dealers see strong technical support for the rupee at 85.75 a dollar. 

India Rupee - World FX: Pound sterling up post stronger-than-view GDP data

NEW DELHI – The pound sterling rose 0.2% against the dollar after data on Thursday showed the UK economy grew faster than expected in March. The UK economy expanded 0.2% in March from February, compared to a flat reading of 0.0% expected by economists polled by Reuters.

In For Jan-Mar, the economy grew 0.7%, up sharply from an increase of 0.1% in the last three months of 2024, data showed. This was above the 0.6% growth forecast in a Reuters poll. 

The dollar index weakened as a jump in the South Korean won fuelled speculation that the US was seeking a weak greenback during tariff talks. The South Korean won was up 0.4% against the dollar on Thursday. Some media reports said on Wednesday that officials from South Korea and the US met last week to discuss the dollar/won exchange rate, leading to a dollar-selling spree. However, a Bloomberg report on Wednesday said the US was not negotiating for a weaker dollar as part of tariff talks. 

The dollar index also fell as investors await US retail sales data later in the day for more cues on the health of the world's largest economy. They also await US Federal Reserve Chair Jerome Powell's speech later in the day for more cues regarding the outlook for US rates. 

Fed Vice Chair Philip Jefferson on Wednesday said recent inflation data pointed to continued progress towards meeting the Fed's 2% inflation goal, but the outlook was now uncertain due to the possibility that new import taxes would drive prices higher. At 1445 IST, the dollar index, which measures the greenback's strength against a basket of six major currencies, was at 100.78 against 101.02 Wednesday and 100.93 Tuesday.

The euro was up 0.3% against the dollar, tracking weakness in the dollar index. Reuters reported on Wednesday citing sources that European Central Bank supervisors had urged some banks to assess their need for US dollars in times of stress, as they plan scenarios in which they cannot depend on tapping the Federal Reserve under the Donald Trump administration.

The Japanese yen rose 0.5% against the dollar. The Australian dollar rose 0.1% against the US unit after data released on Thursday showed employment rose more than expected in April. However, the central bank is still widely expected to cut rates by a quarter point to 3.85% next Tuesday amid softening inflation and global uncertainty caused by US tariff policies. Data showed net employment jumped 89,000 in April from March, when they rose an upwardly revised 36,400. This was far above market forecast of a 20,000 rise and the biggest monthly increase in over a year. (Pratiksha) 

 India Rupee: Premium up as banks buy fwd dlrs on onshore-offshore arbitrage

MUMBAI – The one-year dollar/rupee forward premium was up Thursday as a few banks purchased forward dollars to take advantage of the arbitrage opportunity between onshore forward premiums and offshore non-deliverable forward premiums, dealers said. However, a higher benchmark US Treasury yield limited the rise of premiums, dealers said.

"There is a tussle going on between the people who want (one-year dollar/rupee) premium closer to 2.0% and those who want it to be around 2.15%," a dealer with a state-owned bank said. "Some arb (arbitrage) paying was there, but then again it came back from today's high."

The one-year exact period dollar/rupee forward premium rose to a high of 2.14% on an annualised basis, before retreating slightly. It was 2.12% at 1346 IST, up from 2.11% Wednesday, but down from 2.17% Tuesday. On an absolute basis, the premium was 181.17 paise, up from 180.65 paise Wednesday but down from 185.25 paise Tuesday.

The benchmark 10-year US Treasury yield rose 4 basis points to settle at 4.53% Wednesday. This capped the rise in dollar/rupee forward premiums, dealers said. Forwards of a currency pair are reflective of the interest rate differential between two countries.

A rise in the banking system liquidity surplus also limited the upward movement in forward premiums, dealers said. On Wednesday, the Reserve Bank of India had net absorbed INR 1.84 trillion from the banking system, higher than INR 1.54 trillion Tuesday.

Going forward, the dollar/rupee forward premium is expected to remain lower because of more chances of rate cuts in India, dealers said. However, there is uncertainty on the exact level as market participants await clarity on the interest rate movement in the US. While market participants expect inflation to ease in the US after the country and China reduced additional tariffs imposed on each other's goods, they are still uncertain about its effects on the country's economy.

To better gauge the health of the US economy, market participants are waiting for weekly US unemployment insurance claims, Producer Price Index for April, and advanced monthly retail sales data for April, all of which are scheduled to be released later in the day.  (Sourabh Kumar)

India Rupee: Erases some losses on bks' dlr sales likely for RBI, exporters

MUMBAI – The rupee erased some of its losses after a few state-owned banks sold dollars, likely on behalf of the Reserve Bank of India, dealers said. The central bank is believed to have intervened in the currency market to limit further depreciation in the Indian currency, dealers said. The rupee slipped to a low of 85.7300 per dollar, mainly due to dollar buying by foreign banks, dealers said.

"Central bank sold around 73 (85.73 a dollar), and then exporters also sold dollars," a dealer with a state-owned bank said. In the morning, the rupee had come under pressure as foreign banks purchased the greenback for foreign fund outflows from domestic equities, dealers said. At 1247 IST, both the Nifty 50 and BSE Sensex were down 0.1%.

Some state-owned banks also purchased the dollars, which weighed on the rupee, dealers said. Their dollar purchases were related to payment requirements for defence equipment, according to most dealers.

However, as the rupee hit its intraday low, the RBI intervened in the foreign exchange market by selling dollars to prevent further fall, according to dealers. Some dealers said that if the rupee had remained under pressure and approached 86.00 per dollar, importers might have rushed to buy dollars. That could have put even more pressure on the rupee, dealers said.

Sensing the RBI's likely presence in the market and the rupee's limited fall, exporters also stepped in to sell dollars, taking advantage of the relatively higher dollar/rupee levels, dealers said.

Market participants keenly await India's trade data for April, which will be released after market hours Thursday. For the rest of the day, the rupee is expected to trade in the 85.20–85.80 range, with strong technical support seen at 85.75 per dollar. (Sourabh Kumar)

India Rupee - Asia FX:Units up; South Korean won rises post better jobs data

MUMBAI – Asian currencies rose in early trade Thursday due to a slight fall in the dollar index. The dollar index inched lower ahead of the release of a few key economic data later in the day. Apart from weekly unemployment insurance claims in the US, the Producer Price Index and advanced retail sales data for April will be released Thursday. Market participants await these data points to assess the impact of tariffs on the US economy, market participants said.

The dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 100.83 at 0950 IST, down from 101.02 Wednesday, and 100.93 Tuesday. While the announcement of a pause in additional tariffs imposed by the US and China on each other's imported goods gave some boost to investors' sentiment, they were still waiting for more details on trade talks between both the countries.

The South Korean won was up 0.5% against the greenback after data released Wednesday showed that employment increased for the fourth consecutive month. The number of employed people above 15 years of age rose 0.7% on year in April. The overall job growth was driven by elderly, those aged 60 and above. The unemployment rate decreased to 2.7% in April, down from the previous month's rate of 2.9%.

The Philippines peso and the Indonesian rupiah were up 0.2% each against the greenback. The Taiwanese dollar rose 0.4% against the greenback. The Malaysian ringgit rose 0.1% against the greenback. Market participants now wait for the final GDP data release, scheduled Friday. 

The Thai baht was up 0.1% against the greenback on fall in expectation of more rate cuts in the country. Officials of the Bank of Thailand said Wednesday that they needed some policy space to combat the chances of instability likely to stem from growing global uncertainty, as per media reports. Officials spoke at an analysts' conference in Bangkok Wednesday.  (Sourabh Kumar)

India Rupee: Sharply down on FX outflows; exporters' dollar sales limit fall

MUMBAI – The rupee fell sharply against the dollar in early trade Thursday as some foreign banks purchased the greenback, likely for foreign fund outflows from domestic financial markets, dealers said. A few exporters sold the greenback at relatively higher dollar/rupee levels, which limited the fall of the Indian currency, dealers said.

"There are foreign banks who have been buying since morning," a dealer with a state-owned bank said. "They are buying (dollars) probably for outflows after US-China trade talks started and tariffs were halted."

The US and China announced a pause on additional tariffs imposed on each other's goods, which boosted investor sentiment towards the assets of both nations, market participants said. "This has probably led to outflows from India, and we are seeing since the decision was made, there are foreign banks who buy (dollars) in the morning," a dealer with another state-owned bank said. Domestic indices also fell Thursday, with both the Nifty 50 and BSE Sensex down 0.3% at 0930 IST. 

The dollar index inched lower to 100.82 at 0930 IST from 101.02 on Wednesday. The index, which measures the strength of the dollar against a basket of six major currencies, was at 100.93 Tuesday. 

While some exporters sold dollars, most waited for the rupee to fall further during the day before selling the greenback in large quantum, dealers said. So far, the rupee has hit a low of 85.6200 a dollar. A few dealers also speculated that the Reserve Bank of India sold dollars to prevent a sharp fall in the Indian currency. However, others did not confirm this.

Most importers are expected to buy dollars only when the rupee rises above 85.20 a dollar, a dealer with a foreign bank said. However, they may rush to purchase the greenback if the rupee keeps on falling throughout the day. If the rupee moves lower towards 86.00 a dollar, importers may increase their dollar purchase due to fear of a sharper fall in the rupee, dealers said.

For the rest of the day, the rupee is seen moving between 85.20 and 85.90 against the dollar. Dealers see strong technical support for the rupee at 85.80 against the greenback.  (Sourabh Kumar)

India Rupee: Expected range for rupee - May 15

MUMBAI – Following are the expected support and resistance levels for the rupee on Thursday, 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 Akul Nishant Akhoury

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