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Informist, Wednesday, May 21, 2025

By Gowri Lakshmi

MUMBAI – The rupee ended steady against the dollar Wednesday as a fall of the dollar index was offset by dollar purchases by oil marketing companies, dealers said. A few exporters also sold dollars, which provided some cushion to the rupee, dealers said.

"If we look at what's been happening lately, it is very difficult for the rupee to move past 85.70 (a dollar)," a dealer at a private sector bank said. "Exporters are now selling (dollars) at whichever higher levels during the day."

After moving in a narrow range of just over 16 paise, the rupee settled at 85.6375, little changed from 85.6350 Tuesday. Most other Asian currencies rose 0.1-1.3% against the dollar owing to the weakness of the dollar index. The South Korean won gained the most amongst its regional peers.

The rupee opened largely unchanged at 85.6450 a dollar as the positive impact of the fall of the dollar index was offset by dollar purchases by oil marketing companies, who were wary of a further rise in crude oil prices, dealers said. Crude oil prices rose on reports that Israel is planning to strike Iranian nuclear facilities, which may disrupt the global supply chain. The July Brent Crude contract on the Intercontinental Exchange rose to a high of $66.63 per barrel, up from $65.38 per barrel Tuesday and $65.54 per barrel Wednesday.

However, as volume in the currency market was lower than usual, even small trades in the currency market triggered excessive movement in the dollar/rupee, dealers said.

The rupee was supported by a drop in the dollar index as investors digested comments by multiple US Federal Reserve officials and assessed the health of the US economy after the recent slew of weaker-than-expected economic data. St. Louis Fed President Alberto Musalem Tuesday cautioned that despite recent de-escalation in US-China trade tensions, the US labor market may weaken and prices could increase. Atlanta Fed President Raphael Bostic said the US economy may be on the brink of a price-hike wave.

At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.42, down from 100.01 Tuesday and 100.38 Monday. The index fell to a low of 99.40 earlier in the day, its lowest level since May 7.

Dealers expected the rupee to fall below 85.75 a dollar owing to dollar demand from oil marketing companies, but a fall in the dollar index and dollar sales by a few exporters at 85.65 a dollar limited the rupee's fall. Noting this, other exporters also sold dollars, which provided support to the rupee. Dealers said the view of the market has changed to 'sell on rise'. 

FORWARDS

The one-year dollar/rupee forward premium ended higher despite a rise in US Treasury yields and forward dollar sales by banks, likely on behalf of exporters, dealers said. The premium had risen to a high of 2.11% earlier in the day. Forwards of a currency pair are reflective of the interest rate differential between the two countries.

US Treasury yields rose due to the growing concerns about the US economic outlook and comments by US Federal Reserve officials on the impact of President Donald Trump's trade policies. The premium rose earlier in the day because banks likely executed sell/buy swaps, that is, sell for immediate delivery and buy for delivery later, in the onshore forwards market, noting a rise in premiums in the offshore non-deliverable forwards market, dealers said.

At 1530 IST, the premium on the one-year, exact-period dollar/rupee forward contract was 179.30 paise, off the day's high of 182.27 paise and against 177.17 paise at Tuesday's close. On an annualised basis, the premium was at 2.08%, marginally up from the previous close of 2.07%.

OUTLOOK

On Thursday, the rupee will take cues from the movement of the dollar index and the offshore Chinese yuan, dealers said. A further rise in crude oil prices may prompt oil-marketing companies to buy dollars, which may weigh on the rupee. However, dealers expect the Reserve Bank of India to intervene with dollar sales at 85.70 a dollar to prevent the rupee from falling sharply.

Dealers also expect exporters to continue to sell dollars, which may support the rupee, dealers said. Dealers expect the rupee to move within the range of 85.20-85.80 a dollar. Dealers see strong technical support for the rupee at 85.70 a dollar.

India Rupee - World FX: Dollar index declines after Fed officials' comments

MUMBAI – The dollar index retreated Wednesday as investors assessed comments by multiple US Federal Reserve officials on the state of the economy. St. Louis Federal Reserve President Alberto Musalem signalled caution about the likelihood of a weakening US labour market and prices rising despite easing of trade tensions between Washington and Beijing. 

"In this scenario, the current stance of monetary policy, which is focused on bringing inflation back to 2% in the context of a full-employment labor market, will remain appropriate," Musalem said. "But that's only the case if the public continues to believe that inflation will come down, a faith that could be shaken if prices stay elevated".

Atlanta Fed President Raphael Bostic said the US economy might be on the brink of a price-hike wave. The dollar also came under pressure after US President Donald Trump Tuesday failed to convince his fellow Republicans in the US Congress to unite over a tax-cut bill. The bill would extent the 2017 tax cut and add tax breaks on income, with analysts expecting an addition of $3 trillion-$5 trillion to the federal government's debt. 

At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.68, down from 100.01 Tuesday and 100.38 Monday. The index fell to 99.42, the lowest level since May 7. Market participants are now keenly watching the progress in bilateral talks between the US and Japan.

Both the euro and the Swiss franc strengthened 0.4% against the greenback owing to weakness in the dollar index. The pound sterling was up 0.1% after the UK's annual inflation rate hit 3.5% in April, higher than analysts' forecast of 3.3% in a Reuters poll. Core inflation was 3.8% on year in April, up from 3.4% the month prior. 

The Japanese yen was up 0.3%. Data published earlier in the day showed Japan's trade balance unexpectedly fell in April due to aggressive tariffs by the US and as a strong currency weighed on its exports. Japan's trade balance shrank to a deficit of $800 million. The Canadian dollar rose 0.2%. Gains in the currency were capped as Canada's annual inflation rate fell to 1.7% in April. The overall inflation rate fell from 2.3% in March after the removal of a federal consumer carbon tax.

The Australian dollar was up 0.2%, while the New Zealand dollar rose 0.1% against the greenback.  (Gowri Lakshmi)

India Rupee: Premium falls as US yields rise, exporters sell fwd dollars

NEW DELHI – The one-year dollar/rupee forward premium came off its earlier high and fell due to a rise US Treasury yields and banks' forward dollar sales, likely on behalf of exporters, dealers said. The premium had hit a high of 2.11% earlier in the day. 

"I think the broader direction for forwards rate is on the lower side, looking at the upmove in US yields. So we are seeing some exporters interest at these levels," said a dealer at a private bank.

US Treasury yields rose due to the growing concerns about the US economic outlook and comments by US Federal Reserve officials on the impact of President Donald Trump's trade policies. Forwards of a currency pair are reflective of the interest rate differential between the two countries. 

Cleveland Fed President Beth Hammack cautioned that current trade developments could lead to stagflation, although other administration policies might offset this. St. Louis Federal Reserve Bank President Alberto Musalem said despite the recent easing in US-China trade tensions, the labor market looks likely to weaken and prices will head higher.

Dealers said banks sold dollars for forward delivery, likely on behalf of exporters, in order to take advanatage of the rise in the levels, which weighed on premiums. "I think the 2% level (for one-year dollar/rupee forward premium) will break in some time. There is strong support there but it will break and may be move to 1.95%," said a dealer at a state-owned bank. 

Premium rose earlier in the day because banks likely executed sell/buy swaps, sell for immediate delivery and buy for delivery later, in the onshore forwards market, noting a rise in premiums in the offshore non-deliverable forwards market, dealers said.

At 1420 IST, the premium on the one-year, exact-period dollar/rupee forward contract was 178.33 paise, off the day's high of 182.27 paise, as against 177.17 paise at Tuesday's close. On an annualised basis, the premium was at 2.06%, against the previous close of 2.07%. (Pratiksha)

India Rupee: Remains steady as exporters' dlr sales offset oil cos' dlr buys

MUMBAI – The rupee remained broadly steady against the dollar Wednesday as banks' dollar sales on behalf of exporters offset the impact of dollar purchases on behalf of oil marketing companies and other importers, dealers said. "It has become a sell (dollars) on rise (in dollar/rupee) market now. Exporters sold when the rupee levels were around 85.65 (a dollar). There isn't much dollar demand from importers," a currency trader at a brokerage firm said. 

Volume in the currency market continues to remain lower than usual due to lack of significant triggers, dealers said. The rupee has moved in a range of just over 15 paise so far in the day. 

Dealers said oil marketing companies purchased the greenback in early trade, wary of a further rise in crude oil prices, which weighed on the Indian unit. Oil prices rose on reports that Israel is planning to strike Iranian nuclear facilities, which may disrupt the global supply chain. At 1345 IST, the July Brent Crude contract on the Intercontinental Exchange was at $66.18 per barrel, up from $65.38 per barrel Tuesday and $65.54 per barrel Wednesday. 

Exporters sold the greenback to take advantage of the relatively higher dollar/rupee levels, supporting the Indian currency, dealers said. "Exporters have gotten active. Maybe they expect more dollar weakness and find these (rupee) levels lucrative for now," said a dealer at a private bank. 

The dollar index fell after comments from Federal Reserve officials on Tuesday stoked concerns around the US economic outlook amid uncertainties related to President Donald Trump's trade policies. St. Louis Fed President Alberto Musalem warned that despite recent cooling in US-China trade tensions, the US labor market is likely to weaken and prices could increase. Atlanta Fed President Raphael Bostic said the US economy may be on the brink of a price-hike wave.

At 1345 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.68, down from 100.01 Tuesday and 100.38 Monday. For the rest of the day, the rupee is seen moving between 85.40 and 85.75 against the dollar. Dealers see strong technical support for the rupee at 85.70 against the greenback.  (Gowri Lakshmi)

India Rupee: Technical levels for rupee - May 21

MUMBAI – At 1100 IST, the rupee was at 85.5625 per dollar. At 0900 IST, the rupee was at 85.6450 a dollar, against the previous close of 85.6350. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Sourabh Kumar and Gowri Lakshmi)

India Rupee - Asia FX: Most units up as dlr dn; Bk Indonesia rate move eyed

MUMBAI - Most Asian currencies traded on a higher note against the dollar Wednesday as the dollar index declined on increasing concerns over the health of the US economy. Investor sentiment has been hit as multiple US Federal Reserve officials hinted at weakening of the labour market and inflationary pressures. 

St. Louis Federal Reserve President Alberto Musalem Tuesday spoke about the possibility of a weakening labour market in the world's largest economy despite a de-escalation of trade tensions with China. "In this scenario, the current stance of monetary policy, which is focused on bringing inflation back to 2% in the context of a full-employment labor market, will remain appropriate," Musalem said. "But that's only the case if the public continues to believe that inflation will come down, a faith that could be shaken if prices stay elevated."

At 1015 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.63, down from 100.01 Tuesday and 100.38 Monday. In early trade, the index fell to 99.56, the lowest level since May 7.

The Indonesian rupiah was down 0.1% against the greenback ahead of the policy rate decision by Bank Indonesia due later in the day. The Indonesian central bank is widely anticipated to cut interest rates by 25 basis points to spur economic growth. Bank Indonesia has maintained status quo in its policy decisions since January as the central bank aimed at stabilising the rupiah amid friction over tariff policies with the US. 

Indonesia's Minister of Finance Sri Mulyani Indrawati Tuesday said the government's macroeconomic framework and fiscal policy guidelines for next year projects the national economic growth to reach between 5.2-5.8%. "We are projecting this growth while maintaining household consumption, encouraging economic transformation and reform, and improving the investment ecosystem and the quality of our human resources," Mulyani said.

The Taiwan dollar was up 0.1% against the greenback. On Tuesday, Taiwanese President said the trade tensions with the US are just 'friction between friends', showcasing optimism around the bilateral trade talks with Washington which are underway. The US and Taiwan have long "cooperated and have also encouraged each other to grow," Lai Ching-te said. "Even if there are differences of opinion, as long as there is a foundation of trust and sincere dialogue, they can understand each other better and deepen their friendship," he added. 

The South Korean won was up 0.5% due to a weak dollar. However, gains in the currency were limited after data showed a fall in the value of its exports so far this month. Preliminary trade data showed South Korean exports fell further in May, especially to the US. Trade negotiations between Seoul and Washington are in progress. According to data published earlier in the day, the value of exports fell 2.4% on year in the first 20 days of this month. Overall imports declined by 2.5%, resulting in a trade deficit of $300 million.

Further, South Korean government Wednesday vowed more support measures for key export industries, including auto and biopharmaceutical sectors, which are likely to be hit by the aggressive tariffs imposed by the US. "The government plans to prepare in advance for item-specific tariffs, such as pharmaceutical products and semiconductors, and strengthen support for 'U-turn' investments," Acting Finance Minister Kim Beom-seok said.

The Chinese yuan and the Philippine peso were up 0.1% each while the Thai baht rose 0.5% against the greenback. The Malaysian ringgit strengthened 0.6% against the US currency after Malaysia's trade hit record growth in April, with both exports and imports logging double-digit growth. Data showed trade rose 18.2% on year in April.  (Gowri Lakshmi)

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

MUMBAI – The rupee was steady against the dollar on Wednesday as dollar purchases by a few importers, including oil marketing companies, offset the impact of weakness in the dollar index, dealers said.

"The rise in oil prices has pushed some of the OMCs (oil marketing companies) to buy (dollars)," a dealer at a state-owned bank said. "Not many are there as most are in a 'wait-and-watch' mode, but we expect dollar demand by importers to pick up later in the day." 

Dealers expect the rupee to fall to as much as 85.75 a dollar later in the day due to expectations of an increase in dollar purchases by oil marketing companies. Volumes in early trade remained dull but are expected to increase later in the day, dealers said. If the rupee falls below 85.70 a dollar, dealers expect exporters to sell dollars at relatively high dollar/rupee levels.

The rupee was weighed down as oil prices rose almost 1% in early trade to owing geopolitical tensions between Israel and Iran, dealers said. Since crude oil is a major commodity India imports, a rise in its price raises the import bill of the country, putting pressure on the domestic currency. A few reports suggested Israel might be planning to strike Iran's nuclear facilities, which will disrupt supply in the West Asian region. At 0940 IST, the July Brent Crude contract on the Intercontinental Exchange was at $66.36 per dollar, up from $65.38 per dollar Tuesday and $65.54 Monday. 

A fall of the dollar index supported the rupee, dealers said. The index declined Wednesday due to concerns about US economic growth amid uncertainty around President Donald Trump's trade policies. On Tuesday, St. Louis Federal Reserve President Alberto Musalem cautioned about the possibility of the US labour market losing steam despite de-escalation of tensions between the US and China. At 0940 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.62, down from 100.01 Tuesday and 100.38 Monday. 

During the day, the rupee is seen moving between 85.40 and 85.70 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 21

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

(Gowri Lakshmi and Sourabh Kumar) 

End

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

Edited by Ashish Shirke

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