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Informist, Monday, Jun. 2, 2025

By Gowri Lakshmi

MUMBAI – The rupee ended sharply higher against the dollar Monday as the dollar index fell to a near six-week low and as foreign banks sold the greenback for foreign fund inflows, dealers said. Volumes in the currency market also remained lower than usual due to lack of significant triggers, dealers said. "The dollar is stuck, the rupee is also range-bound, nothing much is happening now... market will likely move once this week ends with policy decision and US NFP (non-farms payrolls)," a dealer at a private sector bank said. 

After rising about 0.2% against the dollar, the Indian currency settled at 85.3825 against the greenback, sharply up from its previous close of 85.5775. The rupee moved in a range of over 22 paise during the day. 

Although most Asian currencies traded lower against the greenback in early trade, these ended on a mixed note Friday as investors digested the ongoing tariff related uncertainties and escalating US-China trade relations. The Thai baht was the biggest gainer, rising 1% against the greenback, while the Malaysian ringgit was the worst hit.

The rupee started the week on a positive note, opening higher at 85.5200 against the greenback as ongoing tariff worries and escalating trade tensions between the US and China weighed on the dollar index, dealers said. Investors weighed the impact of the ongoing tariff uncertainties on the US economic growth after US President Donald Trump said Friday that China had violated the preliminary bilateral trade agreement. Trump said he intended to raise the import duties on steel and aluminium to 50% from 25% worldwide. 

In response to Washington's allegations, Beijing said Monday Trump's accusation on China was "groundless" and it has vowed to take forceful measures to safeguard its interests. This triggered another strained phase of bilateral trade relationship between the world's two largest economies. At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.74, down from 99.44 Friday and 99.33 Thursday. The index's previous low was 98.68 that it touched on Apr. 22. 

The rupee's rise in early trade was limited by dollar purchased from a few importers and oil marketing companies, dealers said. Oil marketing companies purchased the greenback, fearing a further rise in crude oil prices owing to geopolitical tensions and lower-than-expected output hike by the Organization of the Petroleum Exporting and its allies, dealers said.

Crude oil prices also advanced nearly 1% Monday as supply-side concerns were triggered due to rising geopolitical tensions between Russia and Ukraine after the latter launched drone attacks on four Russian military airbases, destroying more than 40 warplanes, The Wall Street Journal reported. Further, crude prices also rose as the OPEC and allies decided to hike output for July by 411,000 barrels per day, triggering a rally as market participants expected a larger quantum of output hike.

"Despite the large increase, oil prices rallied. This could be because there had been suggestions that the group may go for an even larger supply increase. Rising tensions between Russia and Ukraine added further support to the market," analysts at ING said in a report. 

At 1530 IST, the August Brent Crude contract on the Intercontinental Exchange was at $64.95 per barrel, up from $63.90 per barrel Friday and $64.15 per barrel Thursday.

However, the rupee was supported and rose to a high of 85.2975 as foreign banks sold the greenback, likely for foreign-fund inflows, dealers said. They said the currency market will likely pick up tracking the Reserve Bank of India's Monetary Policy Committee's policy decision on Friday, when it is widely expected to cut the repo rate by 25 basis points. The rate-setting panel of India's central bank is scheduled to meet from Wednesday.

"After MPC, I think the next big cue awaited is the economic data from the US and speeches by several Fed officials," a dealer at a state-owned bank said. "The RBI rate cut is priced-in, that is unlikely to have any signficant impact on the rupee... maybe a 20 paisa movement," another dealer at a private sector bank said. 

FORWARDS

The one-year dollar/rupee forward premium ended slightly higher Monday as a few banks purchased dollars for forward delivery after India's GDP for the March quarter was higher than expected, dealer said. India's GDP growth rose to a four-quarter high of 7.4% in Jan-Mar due to higher government capital expenditure and pick-up in construction activity, data released by the statistics ministry Friday showed.

The benchmark 10-year US Treasury yield rose slightly in early European trade, which capped the upward move in dollar/rupee forward premiums, dealers said. Forwards of a currency pair are reflective of the interest rate differential between the two countries.

The one-year exact-period dollar/rupee forward premium was 1.98% at 1530 IST, slightly up from 1.96% Friday and 1.94% Thursday. On an absolute basis, the premium ended 169.10 paise, up from 167.50 paise Friday and 164.98 paise Thursday.

OUTLOOK

On Tuesday, the rupee will take cues from the movement in the dollar index and the crude oil prices, dealers said. The rupee may come under pressure as a further rise in crude oil prices may prompt oil marketing companies to purchase the greenback in large quantum, dealers said. However, they expect the dollar index to remain weak, which may support the rupee or limit the losses in the Indian unit on account of importers' dollar demand. 

Market participants will closely watch for developments in the geopolitical front and any news relating to US tariff and trade policies, dealers said. Market participants keenly await the US ISM Purchasing Managers' Index for May due later in the day. 

Dealers expect the volume in the currency market to be in thin band and the rupee to trade in range above the key level of 85.70 a dollar. The dollar is seen trading in the range of 85.20-85.70. Dealers peg strong technical resistance for the Indian unit at 85.30 a dollar. 

India Rupee - World FX: Dollar index falls more on rising US-China tensions

MUMBAI – The dollar index fell further in European trading hours as investors weighed on the strained trade relations between US and China. US President Donald Trump Friday accused Beijing of violating the preliminary bilateral trade agreement and threated to raise import duties on steel and aluminium to 50%, effective Wednesday. On Monday, China said accusations on Beijing were "groundless" and pledged to take forceful measures to safeguard its interest.

At 1430 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.79, down from 99.44 Friday and 99.33 Thursday. The dollar index fell to 98.67, the lowest level since Apr. 22. Market participants are waiting for the US manufacturing purchasing managers' index for May, due later in the day.

The euro rose 0.6% against the US unit after Eurozone's manufacturing PMI rose to 49.4 in May from 49.0 in the month prior. The PMI for May is at a 33-month high and in line with market expectations but below 50.0, which indicates contraction. A reading above 50 indicates expansion.

The Japanese yen jumped 0.8% against the greenback owing to weakness of the dollar index. Data published earlier in the day showed Japan's factory activity contracted at the slowest pace in five months in May amid clouds of US tariff imposition. Japan's manufacturing PMI rose to 49.4 in May from 48.7 in April, down below the key level of 50.0 for the eleventh consecutive month. However, the PMI reading was higher than the flash estimate of 49.0.

The Australian dollar also rose 0.8% against the US unit, but the rise was limited as the country's manufacturing PMI fell to 51.0 in May from 51.7 April. The Canadian dollar was up 0.3% ahead of the PMI data for May due later in the day. The Swiss franc was up 0.5% and the pound sterling rose 0.6% against the greenback. New Zealand markets were shut.  (Gowri Lakshmi)

India Rupee: Premium up as banks buy fwd dlrs on higher-than-view India GDP

MUMBAI – The one-year dollar/rupee forward premium rose slightly Monday as a few banks purchased dollars for forward delivery after a higher-than-expected India GDP, dealer said. India's GDP growth rose to a four-quarter high of 7.4% in the March quarter due to higher government capital expenditure and pick-up in construction activity, data released by the statistics ministry Friday showed. The GDP growth was higher than the expectation of 6.8% by an Informist poll. In the March quarter last year, the GDP growth was 8.4%.

"There were some who expected a higher rate cut this week, but after GDP numbers, their view came back to 25 basis points cut, so there is some paying because of that," a dealer with a state-owned bank said. The rise of the one-year dollar/rupee forward premium is seen temporary as premiums are expected to fall below 1.90% going ahead, a few dealers said. "I think it (one-year dollar/rupee forward premium) should come down to 1.85%," the dealer quoted above said.

Waiting for more data from the US to assess its economy, most market participants did not sell or buy forward dollars in large quantum, dealers said. US manufacturing Purchasing Managers' Index will be released later in the day, and US jobs data will come out Tuesday, both of which are keenly awaited to assess the health of the US economy, dealers said.

The benchmark 10-year US Treasury yield rose slightly in early European trade, which capped the upward move in dollar/rupee forward premiums, dealers said. Forwards of a currency pair are reflective of the interest rate differential between the two countries. Market participants now see the interest rate differential between the US and India narrowing. This is because the Reserve Bank of India is expected to cut the repo rate by 25 bps Friday, while there is no clarity on either the quantum or timeline of rate cuts in the US yet, dealers said.

Moreover, with a record surplus transfer by the RBI to the government, dealers expect the domestic liquidity surplus to improve, which is expected to push forward premiums lower, dealers said. The one-year exact-period dollar/rupee forward premium was 1.98% at 1341 IST, slightly up from 1.96% Friday and 1.94% Thursday. On an absolute basis, the premium was 168.55 paise, up from 167.50 paise Friday and 164.98 paise Thursday.  (Sourabh Kumar)

India Rupee: Stays sharply up as dlr index falls more; volumes in thin band

MUMBAI – The rupee remained sharply higher against the dollar Monday as the dollar index slipped further after risk-off sentiment amongst investors were hit due to rising US-China trade tensions, dealers said. Volumes in the currency market also remained lower than usual, they said. "Volumes are thin lately... there is nothing much happening at these levels, they are pretty grey levels no one can book profit currently," a dealer at a mid-sized state-owned bank said. 

The dollar index weakened further as investors weighed the US-China relations while awaiting key economic data from the US, dealers said. US President Donald Trump announced late Friday that he would raise the import duty on steel and aluminium to 50%, effective Wednesday. Investors assessed the likelihood of the said tariffs' implementation and the possibility of him flipping the latest threats. 

Meanwhile, China said Monday Trump's accusations on Beijing was "groundless" and pledged to take forceful measures to safeguard its interest. Trump on Friday alleged that Beijing violated the preliminary bilateral trade agreement, triggering another strained phase of trade relations between the two superpowers. 

At 1241 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.96, down from 99.44 Friday and 99.33 Thursday. The dollar index fell to a near one-week low of 98.93 earlier in the day. Traders await the US non-farm payrolls data, due Friday, to get more cues on the health of the US labour market. 

The Indian unit is expected to continue trading above the key level of 85.70 a dollar, dealers said. They said while some importers' dollar purchases limited the rupee's rise in early trade, most of importers remained on the sidelines as they had already hedged at the current levels. Market participants have fully priced in a 25-basis-point rate cut by the rate-setting panel of the Reserve Bank of India. RBI's Monetary Policy Committee will announce its decision Friday. 

For the rest of the day, the rupee is expected to trade between 85.30 and 85.70 against the dollar. Dealers peg key technical resistance for the rupee at 85.30 a dollar.  (Gowri Lakshmi)

India Rupee: Technical levels for rupee - Jun 2

MUMBAI – At 1102 IST, the rupee was at 85.4125 per dollar. At 0900 IST, the rupee was at 85.5200 a dollar, against the previous close of 85.5775. 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: Most down as investors weigh new tariff threats

MUMBAI – Most Asian currencies declined on Monday as investors weighed the latest twists in the ongoing tariff and trade policy uncertainties by the US. US President Donald Trump said Friday that Beijing violated the preliminary bilateral agreement and threatened to raise the import duty on steel and aluminium to 50% worldwide. US Treasury Secretary Scott Bessent Sunday said Trump will soon meet Chinese counterpart Xi Jingping to discuss the dispute over critical minerals. 

Data published on Friday showed US inflation continued to soften while consumer spending increased last month. Consumer spending rose marginally 0.2%, in line with market expectations, after an unrevised 0.7% jump in March. The Personal Consumption Expenditure Index, the US Federal Reserve's preferred gauge of inflation, rose marginally by 0.1% in April after being steady in March. On year, the gauge increased 2.1%, slightly lower than 2.3% in the month prior. The core PCE inflation rose 2.5% in April after rising 2.7% in March. 

At 1005 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.26, down from 99.44 Friday and 99.33 Thursday.

The Taiwan dollar was down 0.4% against the greenback. The offshore Chinese yuan fell 0.2% owing to rising concerns amongst investors on US-China trade relations. Data published Monday showed China's Manufacturing Purchasing Managers' Index stood at 49.5 in May, improving slightly from 49.0 in the month prior and in line with market expectations. A PMI reading below 50 indicates contraction in the sector and the reading above that denotes expansion. Non-manufacturing PMI stood at 50.3 last month, lower than the analyst expectations of 50.6.

Indonesian rupiah traded flat against the greenback. Indonesia's manufacturing PMI rose to 47.4 in May from a near-four-year low of 46.7 the month prior, data published earlier in the day showed. The Malaysian ringgit was down 0.3% while the Philippines peso fell 0.2% against the US unit. 

The Thai baht was up 0.1% against the dollar as the country's industrial output rose after 9 months of decline. The Manufacturing Production Index rose by 2.2% on year in April. The South Korean won fell 0.3% against the greenback. Data released Sunday showed South Korea's factory activity contracted for the fourth consecutive month in May due to weak domestic demand and as US tariffs took a toll. The manufacturing PMI rose marginally to 47.7 in May from 47.5 the month prior.  (Gowri Lakshmi)

India Rupee: Sharply up on fall in dollar index; rise in crude prices weighs

MUMBAI – The rupee rose sharply against the greenback Monday as the dollar index weakened after fresh uncertainty over tariffs, dealers said. However, a rise in crude oil price and importers' dollar demand weighed on the rupee and capped gains of the Indian unit, dealers said. "The overnight movement in dollar and crude is being reflected in rupee levels," a dealer at a state-owned bank said. "There is mixed combination; of dollar weakness and negative investor sentiment about trade, so the rupee is pulled from both sides." 

The dollar index declined as investors weighed US President Donald Trump's latest tariff-announcements and its impact on the US economic growth. Over the weekend, Trump accused Beijing of violating the preliminary bilateral agreement and threatened to raise the import duty on steel and aluminium to 50% worldwide. At 0945 IST, the dollar index, which measures the strength in the dollar against a basket of six major currencies, was at 99.27, down from 99.44 Friday and steady from 99.33 Thursday.

Going forward, dealers expect the US dollar to continue to weaken but the advantage of the weakness in the US currency may not be reflected in the rupee/dollar pair due to pressure on the Indian currency from likely foreign fund outflows and rise in crude oil prices. 

The rupee's rise in early trade was limited as oil marketing companies purchased the greenback, wary of a further rise in crude oil prices, dealers said. "There is no panic amongst OMCs currently, the buying (of dollars) and worries also depend on the inventories and not just prices," the dealer said. Oil prices inched up over 1% Monday even as the Organization of the Petroleum Exporting Countries and its allies hiked its output for July by 411,000 barrel per day, in line with market expectations. 

At 0945 IST, the August Brent Crude contract on the Intercontinental Exchange was at $64.26 per barrel, up from $63.90 per barrel Friday and $64.15 per barrel Thursday. 

During the day, the rupee is expected to trade in the range of 85.30-85.75 a dollar. Dealers peg key technical resistance for the Indian unit at 85.30 against the greenback.  (Gowri Lakshmi)

India Rupee: Expected range for rupee - Jun 2

MUMBAI – Following are the expected support and resistance levels for the rupee on Monday, 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 Tanima Banerjee

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