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Informist, Friday, May 23, 2025

 

By Gowri Lakshmi

 

MUMBAI – The rupee logged its biggest single-day gain in over 30 months on Friday, reversing all the losses from Thursday, as foreign banks and some public-sector banks sold the greenback for likely foreign fund inflows into the domestic stock market, dealers said. Traders also trimmed their long dollar positions due to a sustained weakness of the dollar index, dealers said. 

 

After gaining almost 0.9% against the greenback, the Indian unit ended at a two-week high of 85.2125 a dollar, sharply higher than its previous close of 86.0025. The rupee moved in a range of almost 93 paise during the day. 

 

"The rally was driven by a decline in the dollar index to 99.34, down 0.5%, coupled with renewed FII buying after recent selling pressure. The dual support from global dollar weakness and foreign inflows boosted market sentiment," Jateen Trivedi, VP Research Analyst at LKP Securities, said in a note.

 

Most other Asian currencies also gained significantly and rose 0.2%-1.0% against the dollar Friday. The South Korean won gained the most, followed by the Malaysian ringgit and Indian rupee.

 

The rupee began the day slightly higher against the dollar as a few foreign banks, including a UK-based bank, sold dollars likely on behalf of foreign portfolio investors, who wanted to invest in the domestic market, dealers said. "I think for every $100 million infused by FPIs, the rupee moved by 15-20 paisa," a currency trader at a brokerage firm said. 

 

On Friday, the benchmark stock indices, the Nifty 50 and the BSE Sensex, ended 1% higher each. According to some dealers, overseas investors also sold dollars for investing in the initial public offerings of domestic companies. The public offer of Belrise Industries Ltd., which opened on Wednesday, closed on Friday. Dealers speculate that overseas investors might have infused at least $1 billion into the equity market on Friday.

 

However, a few importers purchased dollars in early trade, fearing a further fall in the rupee and pushed the Indian currency to a low of 86.0425, dealers said. Some exporters sold the greenback at around 86.00 a dollar, which prevented the rupee from falling further, dealers said.

 

The rise in the rupee was aided by a fall in the dollar index, which declined more during the European trading hours as the Japanese yen and the euro strengthened significantly. At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.38, down from 99.90 Thursday and 99.69 Wednesday.

 

	AT 1530 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	85.2125	85.9650	85.1100	86.0425	86.0025
1-year dlr/rupee fwd (paise)	174.50	180.45	180.68	174.50	179.73

 

FORWARDSThe dollar/rupee forward premium declined Friday, with the one-year premium ending at a one-month low as exporters sold dollars for forward delivery on the expectation of the rupee rising further in the coming days, dealers said. 

 

The fall in the forward premium was limited by the decline in the 10-year benchmark US Treasury yield Thursday. The 10-year benchmark US Treasury yield ended four basis points lower at 4.54% Thursday. Forwards of a currency pair are reflective of the interest rate differential between the countries.

 

The RBI's transfer of a record INR 2.69 trillion surplus to the government is expected to push the forward premiums further down in the coming days, as it is likely to increase the liquidity surplus in the banking system, market participants said. Its impact will be more on shorter tenure forward premiums, dealers said.

 

At 1530 IST, the premium on the one-year, exact-period dollar/rupee forward contract was at 174.50 paise, down from 179.73 paise Thursday. On an annualised basis, the premium was at 2.05%, down from the previous close of 2.09%.

 

OUTLOOK

The market is shut on Saturday. On Monday, the rupee will take cues from the movement of the dollar index and the offshore Chinese yuan, dealers said. Market participants will closely assess the speech by US Federal Reserve Chair Jerome Powell at Princeton University on Sunday. 

 

Dealers expect the rupee to rise as they expect foreign fund inflows into the domestic stock market to continue. Expectations of a sustained weakness of the dollar index are also seen supporting the rupee, dealers said. Importers may purchase dollars at relatively lower dollar/rupee levels, which may cap gains for the Indian currency, dealers said.

 

"Flows from either side have moved the natural resistance which importers and exporters built in recent times," a dealer at a state-owned bank said. "The market has started becoming volatile again... after the initial calmness in early trade, it truly becomes flow-driven. 

 

Dealers expect the rupee to move within the range of 85.00-85.80 a dollar Monday. Dealers see strong technical resistance for the rupee at 85.10 a dollar.

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India Rupee - World FX: Yen up on upbeat inflation data; dollar index slips

 

	AT 1556 IST	HIGH	LOW	PREVIOUS
GBP/USD	1.3498	1.3499	1.3419	1.3413
EUR/USD	1.1347	1.1349	1.1280	1.1280
NZD/USD	0.5955	0.5955	0.5896	0.5895
AUD/USD	0.6459	0.6459	0.6409	0.6409
USD/JPY	143.1710	144.0900	143.1490	144.0770
USD/CAD	1.3807	1.3860	1.3807	1.3857
EUR/JPY	162.4610	162.6280	162.2090	162.5100
CHF/USD	1.2108	1.2116	1.2063	1.2055
EUR/CHF	0.9371	0.9375	0.9346	0.9348

 

MUMBAI – The yen rose 0.6% against the greenback after Japan's core inflation rose at its fastest annual pace in more than two years last month, raising hopes of another interest rate hike by the Bank of Japan. The core CPI rose 3.5% on year in April, beating analysts' estimate of 3.4%.

 

The dollar index declined during European market hours due to a rise in the Japanese yen and the euro. Data published Thursday showed the US initial jobless claims fell 2,000 to 227,000, lower than analysts' forecast of 230,000 claims in a Reuters poll, signalling a resilient job market in May.

 

Separately, the flash Purchasing Managers' Index showed business activity in the US increased in May amid de-escalation in trade tensions with China. However, the data hinted at a likely uptick in inflation in the coming months and a labour market slowdown. The flash US Composite Purchasing Managers' Index Output Index rose to 52.1 in May from 50.6 last month. A reading above 50 indicates expansion in the sector.

 

At 1518 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.34, lower than 99.90 Thursday and 99.69 Wednesday. The Canadian dollar was up 0.3% while the Swiss franc rose 0.4%.

 

The euro was up 0.6% against the dollar as Germany, the largest economy in the bloc, logged significant expansion of its economy in the March quarter. Germany's GDP grew 0.4% in Jan-Mar, revising the preliminary reading of 0.2%. The pound sterling strengthened 0.6% against the greenback after the UK's retail sales rose 1.2% in April, significantly higher than analysts' forecast of a 0.2% rise in a Reuters poll.

 

The New Zealand dollar surged 0.9% against the greenback after New Zealand's retail sales rose 0.8% on quarter in Jan-Mar, exceeding the market forecast of a 0.1% rise. Tracking gains of the New Zealand dollar, the Australian dollar rose 0.7% against the greenback. Any change in the New Zealand economy directly impacts the Australian currency due to the close bilateral trade relations between the two countries.  (Gowri Lakshmi)

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India Rupee: One-yr premium falls to 1-month low on exporter forward dollar sales

 

	AT 1447 IST	AT 0900 IST	HIGH	LOW	PREVIOUS (AT 1530 IST)
Spot rupee per $1	85.3400	85.9650	85.2900	86.0425	86.0025
1-year dlr/rupee fwd (paise)	176.00	180.45	180.68	175.00	179.73

 

MUMBAI – The dollar/rupee forward premium fell across the curve Friday, with the one-year premium falling to a one-month low as exporters sold dollars for forward delivery on expectation of the rupee rising further in the coming days, dealers said. The one-year exact-period dollar/rupee forward premium fell to 2.05%, the lowest since Apr. 23.

 

"See, what happened yesterday (the rupee fell sharply) was just one instance, but I think, durably speaking, the rupee is going to rise, and that is why you see exporters are continuously selling forwards," a dealer with a foreign bank said.

 

Thursday, the rupee fell quite a lot and ended at a six-week low against the greenback as foreign banks purchased dollars in large quantities on behalf of overseas clients who were pulled money out of Indian equities, dealers said. However, the scenario was reversed Friday, with foreign banks on the selling side for overseas clients who were putting money into Indian shares, they said.

 

The rupee surged to 85.29 a dollar earlier in the day, which is its highest level in over a week. Since the positive outlook on the rupee has not changed despite Thursday's sharp fall, exporters continue to sell forward dollars, dealers said. "I think in a few months, the rupee will go to 84, that is my assumption, and also since US-India IRD (interest rate differential) is going to decline, our forwards will come down," the dealer quoted earlier said.

 

While forward premiums fell, the downward movement was capped as the 10-year benchmark US Treasury yield fell Thursday. It ended four basis points lower at 4.54% Thursday. Forwards of a currency pair are reflective of the interest rate differential between the countries. The one-year dollar/rupee forward premium was 2.06%, on an annualised basis, at 1439 IST, down from 2.09% Thursday and 2.08% Wednesday. On an absolute basis, the premium was 176.00 paise, down from 179.73 paise Thursday and 179.30 paise Wednesday.

 

Market participants now await the announcement of the amount of surplus transfer by the Resrve Bank of India to the government. They expect the RBI to transfer a record surplus of INR 2.80 trillion to the government for FY25. A rise in banking system liquidity will push forward premiums lower.  (Sourabh Kumar)

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India Rupee: Surges on strong FPI flows into local shares; stop-losses hit

 

	AT 1430 IST	AT 0900 IST	HIGH	LOW	PREVIOUS (AT 1530 IST)
Spot rupee per $1	85.3575	85.9650	85.2900	86.0425	86.0025

 

MUMBAI – The rupee surged against the dollar Friday as foreign and state-owned banks persistently sold dollars, likely for foreign portfolio inflows into domestic equities, leading to stop-losses being triggered on long dollar bets around 85.50 a dollar, dealers said. The rupee rose to an over one-week high of 85.2900 during the day. 

 

The rupee was supported as some foreign banks, including a UK-based bank, sold dollars on behalf of FPIs, who wanted to invest in the Indian stock market, dealers said. At 1430 IST, both the Nifty 50 and Sensex were over 1% higher each. 

 

Some foreign fund inflows were also on account of overseas investment into the initial public offerings of domestic companies, they said. The public offer of Belrise Industries Ltd. opened on Wednesday and will close later Friday. Dealers speculate overseas investors might have infused at least $1 billion into the equity market on Friday. 

 

"After yesterday's (Thursday) bloodbath, the rupee was able to  reverse all the losses due to flows into equity," a dealer at a private sector bank said. "But right now, there is action from both sides... inflows and outflows." The rupee fell below the psychologically-crucial level of 86.00 per dollar on Thursday to settle at a near six-week low of 86.0025. 

 

A few banks also purchased the greenback on behalf of foreign portfolio investors, looking to withdraw funds from the debt market, dealers said. This capped further rise in the rupee. "FPIs have become very volatile. One day, there's inflow and the other day we see huge outflows," said a dealer at a private sector bank. "Its tought to put a finger on any one level for rupee."

 

Noting the sharp rise in the Indian currency, a few importers also stepped in to purchase the greenback, weighing on the Indian unit, dealers said. The dollar index remained weaker during European trading hours, also supporting the Indian currency. At 1430 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.44, lower than 99.90 on Thursday and 99.69 Wednesday.

 

For the rest of the day, the rupee is seen moving in a range of 85.20 and 85.70 a dollar. Dealers see immediate technical resistance for the rupee at 85.20.  (Gowri Lakshmi)

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India Rupee: Technical levels for rupee - May 23

 

MUMBAI – At 1108 IST, the rupee was at 85.7875 per dollar. At 0900 IST, the rupee was at 85.9650 a dollar, against the previous close of 86.0025. 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	86.20	85.85	85.70	85.50
Private sector bank	86.30	86.25	85.70	85.65
Brokerage firm	86.30	86.10	85.75	85.50

(Gowri Lakshmi and Sourabh Kumar)

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India Rupee - Asia FX:Up as dlr weakens; Taiwan dlr gains as jobless rate dn

 

MUMBAI – Asian currencies traded higher against the dollar as the US currency weakened Friday on worries over the fiscal health of the world's largest economy. Investors' worries increased after US President Donald Trump's tax cut bill passed the House of Representatives, though with a margin of just one vote. 

 

The dollar index, which measures the strength of the greenback against a basket of six major currencies, was 99.63 at 1012 IST, down from 99.90 Thursday and 99.69 Wednesday.

 

Due to a fall in the dollar index, the South Korean won rose 0.7% against the greenback Friday. However, gains in the South Korean currency were limited due to a slower increase in the country's producer price index. Data released Friday showed that producer price index in South Korea rose at the slowest pace in April since late 2023. 

 

The Taiwan dollar dollar was up 0.2% against the US currency as the jobless rate in Taiwan fell to 3.32% in April, the lowest in 25 months. Data showed that around 399,000 people were unemployed in April, which is a fall of 4,000 from the previous month. It also ended a two-month streak of monthly rise in unemployment numbers.

 

The Philippines peso was up 0.3% against the greenback on hope of resiliency in its economic health going forward amid the global uncertainty. The International Monetary Fund said the economy is likely to grow 5.5% this year, and is seen accelerating to 5.8% next year. Market participants are watching the domestic political developments after President Ferdinand 'Bongbong' Marcos Jr. asked his entire cabinet to resign.

 

Indonesian rupiah, Thai baht, and the Malaysian ringgit were up 0.2%, 0.5%, and 0.6%, respectively against the dollar because of a weak US currency. Market participants have been keeping an eye on the trade talks between the US and these countries.  (Sourabh Kumar)

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India Rupee: Sharply up as foreign banks sell dlrs for FX flows into equities

 

	AT 0949 IST	AT 0900 IST	HIGH	LOW	PREVIOUS (AT 1530 IST)
Spot rupee per $1	85.8000	85.9650	85.9075	86.0425	86.0025

 

MUMBAI – The rupee rose sharply against the dollar early Friday, as foreign banks sold the greenback on behalf of overseas clients for their investment in domestic equities, dealers said. Some exporters also sold dollars at relatively higher dollar/rupee levels, which supported the Indian currency, dealers said.

 

"I think yesterday's (Thursday's) FPI (foreign portfolio investors) selling was just a one-off ..." a dealer at a state-owned bank said. "There is no buying pressure as of now from importers, (and) some exporters are selling for profit-booking".

 

Some foreign fund inflows into domestic equities and into some initial public offerings supported the rupee, dealers said. Both Nifty 50 and the BSE Sensex were up 0.8% each in early trade. Also, it is the last day of Belrise Industries Ltd.'s initial public offering, and there has been some demand from overseas investors, data from BSE showed. "It is the combination of equity flows and IPO, the effect of which you are seeing on the rupee," a dealer with a private bank said.

 

The rupee was also supported by a fall in the dollar index. The dollar index fell after investors weighed the likelihood of a weakening labour market as unemployment rolls were approaching late 2021 levels owing to reluctance by employers to hire due to economic uncertainties. The US flash composite purchasing managers' index signalled at a potential slowdown in the US labour market. 

 

At 0944 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.65, slightly lower than 99.90 on Thursday and steady compared to 99.69 Wednesday. Most other Asian currencies rose in early trade due to a fall in the dollar index. This also provided some cushion for the rupee, dealers said. 

 

Dealers said most importers remained on the sidelines in early trade as they had already bought at lower dollar/rupee levels in recent weeks. Dealers are not expecting excessive dollar demand from importers during the day unless the rupee rises past 85.70 a dollar.

 

During the day, the rupee is seen moving in a range of 85.70 and 86.00 a dollar. Dealers see immediate technical resistance at 85.70 against the dollar.  (Gowri Lakshmi)

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India Rupee: Expected range for rupee - May 23

 

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:

 

PARTICIPANT	SUPPORT	RESISTANCE
State-owned bank	86.20	85.95
Foreign bank	86.30	85.65
Brokerage firm	86.30	85.60
Brokerage firm	86.25	85.50

 

 

 

 

 

 

 

(Gowri Lakshmi and Pratiksha)

 

 

End

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

 

Edited by Saji George Titus

 

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