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Informist, Friday, May 16, 2025

By Gowri Lakshmi

MUMBAI – The rupee ended slightly higher against the dollar Friday as a few state-owned banks sold the greenback, possibly on behalf of the Reserve Bank of India and exporters, dealers said. A few traders also trimmed their long positions in the dollar, which also supported the rupee, they said. However, banks' dollar purchases for importers and foreign fund outflows weighed on the Indian currency. 

"RBI has been actively supporting the rupee at 85.70 (a dollar) since two days," a currency trader at a broking firm said. "Once their presence was there, exporters also sold at whichever profit level." 

After falling to a low of 85.7000 a dollar, the rupee managed to erase most of its losses before ending the week at 85.5050 against the greenback, slightly higher than Thursday's close of 85.5500. The Indian unit moved in a range of 41 paise during the day.

The rupee was supported by a rise in most other Asian currencies as well. Other Asian currencies gained 0.1-0.5% against the dollar, with the Indonesian rupiah being the best performer.

The rupee started the day sharply higher at 85.3100 a dollar owing to a fall in the dollar index, dealers said. The dollar index declined Thursday after the latest economic data from the US showed weaker-than-expected results. The country's Producer Price Index dropped 0.5% in April unexpectedly after a 0.4% fall the previous month. US retail sales increased by just 0.1%, logging a slower pace of growth. Economists had estimated retail sales to remain unchanged in a Reuters poll.

At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 100.78, down from 100.81 Thursday and sharply down from 101.02. Noting the weakness of the dollar, a few traders trimmed their long dollar positions, which in turn supported the rupee.

However, the rupee's gains in early trade were quickly capped as foreign banks purchased dollars for foreign fund outflows, likely for the Bharti Airtel Ltd. block deal worth over $1 billion. Singapore Telecommunications Ltd.'s unit Pastel is likely to sell 0.8% stake through these block deals. The floor price of the deal has been fixed at INR 1,800 per share. Pastel holds 9.49% stake in Bharti Airtel. "Some demand is definitely coming from the Airtel block deal, but its impact will likely be more evident in the rupee levels on Monday," a dealer at a state-owned bank said.

A few importers also purchased dollars, wary of a further fall in the rupee, dealers said. Oil-marketing companies also actively bought dollars as crude oil prices fell over 2% Thursday. The July Brent Crude contract on the Intercontinental Exchange fell to a low of $64.18 per barrel, down from $64.53 per dollar Thursday and significantly lower than $66.09 per barrel Wednesday.

The rupee was pulled to the day's low of 85.7000 as some foreign banks bought dollars for overseas investors, who withdrew funds from the domestic stock market, dealers said. Both the benchmark stock indices, the Nifty 50 and the BSE Sensex, ended 0.2% lower Friday. "After the US-China truce, there has been significant outflows from our market. Most of the funds are now pulled out from India and moved to China," the currency trader said.

As soon the rupee hit the day's low, a few state-owned banks sold dollars, possibly on behalf of the RBI, which limited further losses, dealers said. However, the RBI's intervention was not as aggressive as in the past, they said.

Taking cues from the RBI's dollar sales, exporters also sold dollars, fearing a rise in the rupee, dealers said. Exporters actively sold dollars at 85.60 a dollar and above, taking profits at every possible level. 

FORWARDS

The one-year dollar/rupee forward premium ended slightly lower as foreign banks stepped in to sell dollars for forward delivery, noting a rise in levels in early trade, dealers said. The premium on the one-year exact-period dollar/rupee forward contract rose to a high of 184.17 paise, as against 182.48 paise at Thursday's close. Forwards of a currency pair are reflective of the interest rate differential between the two countries.

The premium rose in early trade tracking an overnight fall in US Treasury yields, dealers said. US Treasury yields fell after a slew of weak economic data released Thursday.  

At 1530 IST, the one-year exact-period dollar/rupee forward premium settled at 181.33 paise, slightly down from 182.48 paise Thursday. On an annualised basis, the premium ended at 2.12%, little changed from Thursday's 2.13%.

OUTLOOK 

The markets are shut Saturday. Monday, the Indian currency will take cues from the movement in the dollar index and the offshore Chinese yuan, dealers said. They also expect the rupee to come under pressure due to the foreign fund outflow from the $1 billion Bharti Airtel block deal.

The movement in crude oil prices will also be closely tracked. A further fall in prices may prompt oil marketing companies to purchase dollars in higher quantities, dealers said. This may put the rupee under pressure.

Dealers also expect the rupee to be weighed down as banks are likely to continue purchasing dollars on behalf of foreign portfolio investors who are looking to withdraw funds from the Indian financial markets. 

However, the RBI is expected to intervene in the currency market at 85.70 and above, which may prevent the rupee from falling sharply, dealers said. During the day, the rupee is seen moving in a range between 85.20 and 85.80 a dollar. Dealers see strong technical support for the rupee at 85.75 a dollar. 

India Rupee - World FX: Japanese yen dn 0.2% after GDP falls more than view

MUMBAI – The Japanese yen fell 0.2% against the dollar Friday after Japan's GDP shrank more than anticipated and at a faster pace than expected in the March quarter, preliminary data published Friday showed. The real GDP contracted 0.7% annually in Jan-Mar, much higher than analysts' forecast of a 0.2% fall. The data also revised the Oct-Dec GDP growth to 2.4% from 2.2% earlier.

Bank of Japan board member Toyoaki Nakamura urged the central bank to pause further rate hikes owing to uncertainties stemming from the tariff and trade policies of the US. Nakamura said the central bank must move with caution on a shift in monetary policy due to the very high uncertainty over US trade policy and its impact on Japan's corporations and on household activity.

"Japan's economy is facing mounting downward pressure," Nakamura said. "Rushing to raise interest rates when growth is slowing could curb consumption and investment with a lag."

The dollar index declined Thursday after softer Producer Price Index data for April. The US Producer Price Index fell 0.5% unexpectedly last month after a 0.4% drop the previous month. Separate data showed US retail sales grew at a slower pace, edging up just 0.1%. In a Reuters poll, economists had estimated the April retail sales to remain unchanged. The latest economic data from the US added to the series of weaker-than-expected data points, providing room for more rate cuts by the US Federal Reserve. 

At 1435 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 100.71, down from 100.81 Thursday and sharply down from 101.02 Wednesday. Due to the weakness in the dollar index, the euro gained 0.2% and the Canadian dollar rose 0.1%.

The New Zealand dollar rose 0.5% against the greenback after the Reserve Bank of New Zealand's survey of expectations for May showed a rise in inflation expectations. The one-year-ahead inflation expectations rose to 2.41% from 2.15% while two-year expectations inched up to 2.29% from 2.06%. Tracking gains in the New Zealand dollar, the Australian currency gained 0.3% against the greenback. Any change in the New Zealand economy directly impacts the Australian currency due to their close bilateral trade relations. 

The Swiss franc rose 0.1% against the dollar. The pound sterling traded flat.  (Gowri Lakshmi)

India Rupee: Premium off high as banks sell forward dollars; fall in US yields help

NEW DELHI – The one-year dollar/rupee forward premium came off a high as foreign banks stepped in to sell dollars for forward delivery, noting a rise in levels in early trade, dealers said.

At 1425 IST, the premium on the one-year, exact-period dollar/rupee forward contract was 183.10 paise, off the day's high of 184.17 paise, as against 182.48 paise at Thursday's close. On an annualised basis, the premium was at 2.13%, unchanged from the previous close, after having risen to a high of 2.16% earlier in the day.

"I think the receiving is mostly on profit booking. But it is not a lot," a dealer at a private-sector bank said. "If US data continues to come weak, we may see a further rise in forward premiums in the coming days."

The premium had risen earlier in the day tracking an overnight fall in US Treasury yields, dealers said. US Treasury yields fell after a slew of weak economic data released Thursday cemented bets of more rate cuts by the US Federal Reserve this year. Forwards of a currency pair are reflective of the interest rate differential between the two countries. 

The US Producer Price Index fell 0.5% in April after an upwardly revised unchanged reading in March and against the Reuters forecast of a 0.2% increase. Retail sales grew 0.1% last month after an upwardly revised 1.7% surge in March, compared with the expectation of economists polled by Reuters that it would remain unchanged after the previously reported 1.5% jump in March.  (Pratiksha)

India Rupee: Pares losses on likely RBI dollar sales; FPI outflows weigh

MUMBAI – The rupee pared most of its losses as some public-sector banks sold dollars, likely on behalf of the Reserve Bank of India, dealers said. A few exporters also sold dollars above 85.60 per dollar levels, which prevented the rupee from falling further, dealers said. Dealers said banks' dollar buys for foreign portfolio investors and importers continue to weigh on the Indian currency. 

"RBI is definitely protecting 85.70 levels, we saw that yesterday (Thursday) as well," a dealer at a private-sector bank said. "Corporate outflows continue along with significant importer buys, so they (RBI) need to step in, otherwise rupee would breach the figure (86 a dollar) soon," another currency trader at a brokerage firm said. 

The rupee fell to a low of 85.7000 a dollar earlier in the day as foreign banks purchased dollars, likely for foreign fund outflows with respect to Bharti Airtel's block deal. Some banks also purchased the greenback on behalf of FPIs, who withdrew funds from the domestic stock market, which further weighed on the rupee. Oil marketing companies and other importers also actively purchased the greenback, wary of a further fall of the rupee, dealers said. Oil prices settled over 2% lower on Thursday after a potential nuclear deal between the US and Iran may have prompted oil companies to purchase dollars in large quantum, dealers said. 

At 1216 IST, the July Brent Crude contract on the Intercontinental Exchange was at $64.28 per barrel, down from $64.53 per barrel Thursday and sharply down from $66.09 per barrel Wednesday. 

However, noting the central bank's intervention, a few exporters sold the greenback to take advantage of the relatively higher dollar/rupee levels, dealers said. This supported the rupee. Dealers noted that the RBI intervention was not "aggressive in nature".

For the rest of the day, the rupee is expected to trade in the 85.30–85.80 range, with strong technical support seen at 85.75 per dollar.  (Gowri Lakshmi) 

India Rupee: Asia FX: Most up due to fall in dlr index post weak econ data

MUMBAI – Most Asian currencies traded on a higher note against the dollar Friday as the dollar index declined after the retail sales data and the Producer Price Index for April added to the latest slew of weaker-than-expected economic data from the US.

Data published on Thursday showed that US retail sales last grew at a slower price, edging up only 0.1%. In a Reuters poll, economists estimated the April retail sales to remain unchanged. Further, the US Producer Price Index fell 0.5% unexpectedly last month after a 0.4% drop the month prior. 

At 0854 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 100.68, down from 100.81 Thursday and sharply down from 101.02 Wednesday.

The Indonesian rupiah rose 0.7% against the US currency. Indonesia's statistics agency has rescheduled the release of the monthly trade data, which was supposed to be released Thursday, to Jun. 2.

The Malaysian ringgit strengthened 0.4% against the greenback in early trade. Tengku Zarful Aziz, Malaysia's Minister of Investment, Trade and Industries said the country shall negotiate trade relations with the US and Russia during the 2025 Asia-Pacific Economic Cooperation summit. He said he is "optimistic" about a trade agreement with Washington within 90-days. 

The Thai baht was up 0.3% against the US dollar. However, gains of the currency were capped as Thailand's consumer confidence, published Thursday, dropped for the third consecutive month in April, the lowest level in seven months owing to US tariffs and a sluggish economic growth. According to the survey conducted by the University of the Thai Chamber of Commerce, the consumer confidence index fell to 55.4 in April from 56.7 in March. 

The Chinese yuan rose 0.7% against the greenback. On Thursday, the People's Bank of China lowers the reserve requirement ratio by 0.5 percentage points, in a move to stabilise its economy and boost domestic demand. The move is expected to infuse approximately $139 billion of long-term liquidity into the banking system. 

The South Korean won was down 0.1% after data published earlier in the day showed import prices dropped for the third straight month in April, owing to a fall in global oil prices. The Import Price Index fell 1.9% last month, following a 0.4% decline seen in March. The Philippine peso was up 0.3% while the Taiwan dollar rose 0.2%.  (Gowri Lakshmi)

India Rupee: Technical levels for rupee - May 16

MUMBAI – At 1053 IST, the rupee was at 85.6825 per dollar. At 0900 IST, the rupee was at 85.3100 a dollar, against the previous close of 85.5500. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Gowri Lakshmi and Pratiksha)

India Rupee: Steady as importers' dollar buys offset fall in dollar index

MUMBAI – The rupee was steady against the dollar Friday as dollar purchases by importers offset the positive impact of a fall in the dollar index, dealers said. A rise in other Asian currencies, however, supported the Indian currency, dealers said. "The rupee opened with a gap, largely due to weak dollar and rise in Asian peers," a dealer at a state-owned bank said. "We expect further fall during the day as importers are also buying at every dip (fall in rupee)." 

After opening over 20 paise higher, gains of the Indian currency from early trade were short-lived as importers bought the greenback, fearing a fall in the Indian currency, dealers said. A fall in domestic equities also weighed on the rupee, according to some dealers. At 0951 IST, the benchmark stock indices, the Nifty 50 and the BSE Sensex, were down 0.3% each.

Dealers also said the rupee might come under pressure as banks purchased the greenback for the Bharti Airtel block deal worth over $1 billion. Singapore Telecommunications Ltd's unit Pastel is likely to sell 0.8% stake through these block deals. The floor price of the deal has been fixed at INR 1800 per share. Pastel holds 9.49% stake in Bharti Airtel. Dealers said though the levels may not be significantly impacted Friday, the rupee might come under pressure on Monday due to the block deal. 

However, the rupee was supported as the dollar index weakened after an unexpected fall in the US producer price index, dealers said. Data on Thursday showed the producer price index for April fell 0.5% after a 0.4% drop the month prior. Separate data also showed US retail sales rose only 0.1% last month. 

At 0943 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 100.69, down from 100.81 Thursday and 101.02 Wednesday.

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 85.70 against the greenback.  (Gowri Lakshmi)

India Rupee: Expected range for rupee - May 16

MUMBAI – Following are the expected support and resistance levels for the rupee on Friday, as forecast by leading banks and brokerages in an Informist poll:

(Gowri Lakshmi 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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