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Informist, Friday, May 30, 2025

By Gowri Lakshmi

MUMBAI – The rupee ended lower against the dollar as banks persistently purchased the greenback for oil marketing companies and other importers, dealers said. However, a weaker dollar index prevented the rupee from falling sharply.

"There is nothing much happening, the market is mostly quiet and range-bound lately... we will only get a clearer idea after the RBI (monetary policy) decision. Dollar weakness definitely supported," a currency trader at a brokerage firm said.

After moving in a range of over 39 paise during the day, the rupee settled at 85.5775 against the dollar, down from its previous close of 85.5075. The rupee hit a high of 85.2425 in early trade due to the dollar index's fall. 

Other Asian currencies ended lower against the greenback as investors continue to assess the ongoing tariff uncertainties and worries. Other Asian currencies fell between 0.1%-0.7%, with the Thai baht being the worst hit.

The rupee started the day significantly higher at 85.3500 against the dollar on a weaker dollar index as investor sentiment was hit due to the ongoing court battle over tariffs, dealers said. On Wednesday, the Manhattan-based Court of International Trade ruled that the sweeping tariffs threatened by US President Donald Trump will not come into effect and that the President has overstepped his powers. 

The dollar index began to retreat from its over one-week high it hit on Thursday after the United States Court of Appeals for the Federal Circuit in Washington said it was pausing the Manhattan-based court's ruling to consider the government's appeal, triggering a court battle. 

At 1530 IST, the dollar index, which measures the strength of the dollar, was at 99.56, broadly steady from 99.33 Thursday but down from 99.88 Wednesday. Market participants now await the US personal consumption data for April, due later in the day. The dollar index had hit an over one-week high of 100.54 on Thursday.

The rupee was also supported as a few foreign banks sold the greenback for likely foreign-fund inflows, dealers said. "Foreign banks have been active since morning, probably for some inflows, but given the mixed sentiment of investors, not any significant quantum of inflows would have come," a dealer at a small-sized public-sector bank said.

In early trade, the rupee continued to trade around 85.25-85.30 for some time, which prompted most of the importers to remain on the sidelines, anticipating a further rise. Noting the unexpected appreciation of the rupee, some exporters sold the greenback to book profits, dealers said. Volume in the currency market also remained lower-than-usual in early trade before picking up later in the day. 

However, banks purchased the dollars during the fixing-related buying window, which capped the gains of the rupee, dealers said. Some dealers also speculated that state-owned banks may have bought dollars, likely for defence equipment-related payments. "There were flows of around $1.5 billion in the morning, but the flows were offset due to importers' and defence-related buying," a dealer at a foreign bank said. 

Importers continued to purchase the greenback to meet their month-end payment requirements, pushing the Indian currency to a low of 85.6375 against the dollar. A fall in domestic equities also weighed on the rupee, according to some dealers. Both the benchmark indices ended in the red on Friday. The Indian currency depreciated 0.6% against the greenback this week. 

FORWARDS

The one-year dollar/rupee forward premium ended slightly higher Friday as some banks purchased forward dollars on behalf of Indian corporates, likely to hedge against their overseas borrowings, dealers said. A fall in the benchmark 10-year US Treasury yield also pushed premiums higher, dealers said. Forward dollar purchases by Indian companies, coupled with a fall in the 10-year US Treasury yield by four basis points to 4.43% Thursday, pushed premiums higher, dealers said.

However, the upward movement in premiums was capped on expectations that the interest rate differential between the US and India will narrow going ahead, dealers said. Forwards of a currency pair are reflective of the interest rate differential between the two countries. 

The one-year dollar/rupee forward premium ended at 1.96%, tad up from 1.94% Thursday. On an absolute basis, the premium was 167.50 paise, up from 164.98 paise Thursday.

OUTLOOK

The foreign exchange market is shut Saturday. On Monday, the rupee will take cues from the movement in the dollar index and crude oil prices, dealers said. The rupee will also closely track movement in offshore Chinese yuan, dealers said. They said market participants will look out for tariff-related news and geopolitical developments. 

The rupee will likely trade rangebound between 85.20-85.70 a dollar next week, dealers said. Traders may also refrain from placing large bets ahead of the Reserve Bank of India's Monetary Policy Committee announcement due Friday. The rate-setting panel of the RBI is widely expected to cut the repo rate by 25 basis points. The rupee may come under pressure as importers may buy dollars, fearing a further fall of the rupee in the near term. 

However, should the rupee fall below the key level of 85.70 a dollar, dealers expect the RBI to actively intervene through dollar sales. Dealers peg strong technical support for the Indian unit at 85.70 a dollar. 

India Rupee - World FX:Euro down as retail sales in Germany fall unexpectedly

MUMBAI – The euro fell 0.2% against the greenback Friday as retail sales in Germany, the largest economy in the European Union, fell 1.1% in April, against a 0.2% rise estimated by analysts in a Reuters poll. Market participants now await inflation data for Germany, due later in the day. 

The dollar index pared gains from Thursday and remained broadly steady ahead of US personal consumption expenditure data, due later in the evening. The US dollar was weighed down as investors digested the ongoing court battle over tariffs. On Wednesday, the Manhattan-based Court of International Trade blocked the aggressive tariffs by US President Donald Trump from being implemented. The dollar rallied on the news and hit an over one-week high. 

However, the US Court of Appeals for the Federal Circuit in Washington said Thursday that the Manhattan-based court's decision was put on hold to consider the government's appeal, triggering a court battle.

The US currency was also weighed down as initial jobless claims data released on Thursday showed the number of Americans filing unemployment benefits increased and the unemployment rate also inched up. Jobless claims for the week ended May 24 rose by 14,000 to a seasonally adjusted 240,000, higher than analysts' estimate of 230,000 claims in a Reuters poll.

At 1441 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.58, broadly steady from the previous close of 99.33 Thursday and 99.88 Friday. The Swiss franc was down 0.1%, while the Canadian dollar traded flat against the greenback ahead of GDP data later in the day. 

The Japanese yen was up 0.1% against the US currency as core inflation in the country's capital hit an over two-year high owing to a rise in food prices, reinforcing hope of an interest rate hike by the Bank of Japan. The Tokyo core consumer price index rose 3.6% this month, exceeding the market forecast of 3.5%. This month's rise also marked the fastest annual pace of inflation rise since January 2023. 

The pound sterling was down 0.1%. Bank of England policymaker Alan Taylor Friday dismissed inflation worries and called for lower interest rates in the UK amid sluggish economy growth due to US tariff uncertainties. "I'm not going to pre-emptively announce my vote, but I think I indicated in my dissent that I thought we needed to be on a lower policy path," Taylor said.

The Australian dollar declined 0.4% after retail sales in the country dropped unexpectedly in April, data published Friday showed. Retail sales fell 0.1% on month in April, against analysts' forecast of a 0.3% rise. Tracking the fall of the Australian dollar, the New Zealand dollar was down 0.3%. Any change in the Australian economy directly impacts the New Zealand currency due to their close bilateral trade relations.  (Gowri Lakshmi)

India Rupee: Premium tad up as banks purchase forward dollars for corporates

MUMBAI – The one-year dollar/rupee forward premium inched slightly higher Friday as a few banks purchased forward dollars on behalf of Indian corporates, likely for their overseas borrowings, dealers said. A fall in the benchmark 10-year US Treasury yield also pushed premiums higher, dealers said.

"There is paying going on from corporates, most likely for their ECBs (external commercial borrowings)," a dealer with a foreign bank said. "Usually we see some services company receiving at this time, but they do not seem to have come with as much quantum, and these corporates paid, so that is visible in levels."

Led by JSW Steel, which raised $900 million in March under the automatic route, Indian companies raised $11.04 billion through external commmercial borrowings in total that month, the highest in six years, as per the latest data available on the Reserve Bank of India's website.

Forward dollar purchases by Indian companies, coupled with a fall in the 10-year US Treasury yield by four basis points to 4.43% Thursday, pushed premiums higher, dealers said. However, the upward movement in premiums was capped on expectations that the interest rate differential between the US and India will narrow going ahead, dealers said. Forwards of a currency pair are reflective of the interest rate differential between the two countries. Consequently, a few banks sold the greenback for forward delivery at relatively higher levels, which capped its rise, dealers said.

After touching the day's high of 1.98%, the one-year exact-period dollar/rupee forward premium was at 1.95% at 1411 IST, slightly up from 1.94% Thursday but lower from 2.01% Wednesday. The one-year exact-period dollar/rupee forward premium fell below the crucial level of 2.0% Thursday, and market participants expect it to continue moving lower. One of the reasons is that US-India interest rate differential is seen narrowing, and the other is banking system liquidity, which is already in surplus, and is seen improving further, dealers said.

On Thursday, the RBI net absorbed INR 1.80 trillion from the banking system, lower than INR 1.91 trillion Wednesday, central bank data showed. After the Reserve Bank of India transferred a record high surplus of INR 2.69 trillion for 2024-25 (Apr-Mar) to the government, market participants expect domestic liquidity to improve further, which would keep dollar/rupee forward premiums lower, dealers said.

Moreover, expectations that the RBI's Monetary Policy Committee will cut the repo rate by 25 basis points on Jun. 6, and there has been no clarity on the timeline of the US Federal Reserve's rate cuts, it is seen pushing the US-India interest rate differential lower, thus keeping premiums down, dealers said.  (Sourabh Kumar)

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

MUMBAI – The rupee was steady against the dollar Friday as demand for dollars from importers offset the positive impact of a fall in the dollar index, dealers said. A few banks also purchased the dollar during the fix-related buying window, which put further pressure on the rupee, dealers said. Volume in the currency market picked up, after remaining lower than usual in early trade.

"Rupee is moving range-bound...this 20-60 (85.20-85.60) should hold, importer buying is there. Other than that, dollar has started strengthening as well," a currency trader at a brokerage firm said. 

Most importers stayed on the sidelines in early trade, anticipating a further rise of the rupee, dealers said. However, seeing the limited rise and dollar demand, more importers began buying dollars in large quantum to meet their month-end payment obligations, dealers said. This has pushed the rupee to touch a low of 85.5625 against the dollar. 

A fall in domestic equities also weighed on the Indian currency, according to some dealers. At 1309 IST, the benchmark stock indices, the Nifty 50 and the BSE Sensex were down 0.3% each. 

The dollar index, after paring all gains from Thursday in early trade, strengthened once European markets opened. The US currency was weighed down as investor sentiment was hit amid a court battle over US President Donlad Trump's sweeping tariffs. At 1311 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.56, slightly higher than 99.33 Thursday, and 99.88 Wednesday. 

In early trade when the rupee was trading around 85.25-85.30, a few exporters sold dollars, which limited the rupee's fall, dealers said. Dealers expect the Reserve Bank of India to intervene with dollar sales if the Indian currency inches towards the key level of 85.70 a dollar. 

For the rest of the day, the rupee is seen moving in a range of 85.25-85.70 against the dollar. Dealers peg key technical support for the rupee at 85.70 a dollar. (Gowri Lakshmi)

India Rupee: Technical levels for rupee - May 30

MUMBAI – At 1119 IST, the rupee was at 85.4000 per dollar. At 0900 IST, the rupee was at 85.3500 a dollar, against the previous close of 85.5075. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Gowri Lakshmi and Pratiksha)

India Rupee - Asia FX: Mixed; dlr weakens after US courts battle on tariffs

MUMBAI – Asian currencies traded on a mixed note Friday as investor sentiment took a hit amid an ongoing court battle in the US over tariffs. The Manhattan-based US Court of International Trade ruled on Wednesday that President Donald Trump was overstepping his power and blocked his aggressive tariffs from coming into effect. Shortly after the ruling, Trump's administration filed an appeal. 

On Thursday, a court battle was triggered as the US Court of Appeals for the Federal Circuit paused the Manhattan-based court's ruling to consider the government's appeal. The court also ordered the plaintiff to respond by Jun. 5 and the administration by Jun. 9. 

The dollar index was further weighed after the US initial jobless data for the week ended May 24 showed the number of Americans filing unemployment benefits rose higher than expected. The jobless claims rose 14,000 to 240,000 while analysts had estimated 230,000 claims. At 0958 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.43, broadly steady from 99.33 Thursday and down from 99.88 Wednesday. 

The Malaysian ringgit traded flat against the dollar while the Indonesian rupiah was up 0.1%. The Thai baht fell 0.3% against the greenback. The offshore Chinese yuan was flat against the US currency as US-China trade talks got "stalled", Treasury Secretary Scott Bessent said Thursday. "I believe that we will be having more talks with them in the next few weeks," he said. 

The Taiwan dollar was down 0.4% against the greenback. Taiwan's central bank said Thursday it will take "timely" measures to ensure stability in financial markets against the backdrop of US tariff uncertainties and geopolitical concerns. "The bank will pay close attention to the possible impact of the relevant developments on the overall economy and the financial system, and will take timely measures to promote domestic financial stability," the central bank said in its annual report.

Further, Taiwan's Deputy Foreign Minister Chen Ming-Chi said the country is continuing its efforts to ensure a trade deal with the US and that they want to bring some "big and beautiful package" that are mutually beneficial. 

The South Korean won slipped 0.4% against the greenback after South Korea's factory output unexpectedly fell in April. Data published earlier in the day showed industrial production fell 0.9% last month, lower than the analysts' estimate of 0.5% gain a Reuters poll. Meanwhile, the Philippine peso rose 0.3% against the US unit.  (Gowri Lakshmi)

India Rupee: Sharply up on fall in dollar index amid tariff uncertainties

MUMBAI – The rupee rose sharply against the US dollar Friday as the dollar index weakened after a US-based court blocked US President Donald Trump's aggressive tariffs, dealers said. "Because of the court ruling and the appeal by his administration, there is still a lot of uncertainty, that is what weighing on the dollar," a dealer at a state-owned bank said. 

The Manhttan-based Court of International Trade Wednesday ruled that the sweeping tariffs would not come into effect and that Trump was overstepping his powers. The dollar rallied on the news and hit an over one-week high Thursday. However, the ongoing uncertainty sparked risk-off sentiment among investors as a federal appeals court temporarily reinstated Trump's tariffs Thursday. 

The United States Court of Appeals for the Federal Circuit in Washington said it was pausing the Manhattan-based court's ruling to consider the government's appeal, triggering a court-battle. 

The US dollar also weakened after initial jobless claims data, published Thursday, showed the number of Americans filing unemployment benefits increased while the unemployment rate also inched up. Jobless claims for the week ended May 24 rose by 14,000 to a seasonally adjusted 240,000, higher than analysts' estimate of 230,000 claims in a Reuters poll. 

At 0919 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.43, broadly steady from 99.33 Thursday and 99.88 Wednesday. The index rose to 100.54 Thursday, the highest level since May 20. 

However, the gains of the rupee were capped as a few importers purchased the greenback to meet their month-end payment obligatons, dealers said. They also said that noting the appreciation of the rupee, most importers remained on the sidelines before buying the greenback in large quantum as they anticipate further rise of the rupee.

"We thought month-end demand would come in early trade, but seems like importers are waiting for more rise (of the rupee)," the dealer said. "Maybe they (importers) will come if rupee comes near 85.20 a dollar. But in all likelihood, the dollar will strengthen in the second half, so before that importers' demand will surge."

During the day, the rupee is seen moving in a range of 85.15 and 85.50 against the dollar. Dealers peg key technical resistance at 85.20 against the greenback. (Gowri Lakshmi)

India Rupee: Expected range for rupee - May 30

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 Sourabh Kumar)

End

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

Edited by Saji George Titus

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