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Informist, Tuesday, Jun. 10, 2025

By Sourabh Kumar

MUMBAI – The rupee ended the day steady against the dollar as demand for the greenback by oil marketing companies offset some likely foreign fund inflows, dealers said. Prices of crude oil also increased, which weighed on the rupee, dealers said. Given that crude is a major commodity imported by India, a rise in its price puts pressure on the import bill of the country, thus weighing on the domestic currency.

"There was not much movement today (Tuesday)," a dealer with a state-owned bank said. "Oil companies were there on the bidding side since morning, but some selling probably for inflows was also present." Dealers also said a few banks sold the greenback on behalf of some exporters, which limited the fall in the Indian currency.

After moving in a range of around 16 paise, the Indian rupee settled at 85.6025 a dollar. On Monday, the rupee had closed at 85.6200 a dollar. The rupee moved in a relatively narrow range of 16.5 paise Tuesday, the same as on Jun. 3. Previously, the narrowest range the dollar/rupee moved was on Apr. 22, at about 14 paise.

The rupee started the day close to Monday's closing level. However, after opening, the rupee rose due to foreign fund inflows, dealers said. Some foreign banks sold dollars at the start of the day, likely for overseas investment into domestic equities, dealers said. It lifted the rupee to the day's high of 85.5200 a dollar in early trade.

The overall volume in the currency market was lower than usual Tuesday. Both importers and exporters did not buy or sell dollars, respectively, in large quantums as they waited for lucrative dollar/rupee levels, dealers said. Importers were hoping for the rupee to fall to around 85.10 a dollar before they could purchase the greenback in significant amounts. Exporters, on the other hand, were watching out for the rupee to fall beyond 85.90 a dollar before they sold significant amount of dollars.

"The dollar/rupee spot pair has been consolidating within a tight range of 85.00 to 86.00, with market participants awaiting a decisive trigger," Anindya Banerjee, head-currency and commodity at Kotak Securities, said in a note.

Meanwhile, the dollar index remained broadly steady, even as it had inched up slightly during early European trade. The dollar index, which measures the strength of the greenback against a basket of six major currencies, was 99.11 at 1530 IST, tad up from 99.00 Monday, but down from 99.20 Friday. Market participants await any detail from the ongoing US-China trade talks in London. US President Donald Trump said Monday that he has been receiving a "good response" from his team in London.

The ongoing US-China talks also lifted crude oil prices higher, which weighed on the rupee, dealers said. These talks outweighed the impact of the Organization of the Petroleum Exporting Countries' decision to increase oil output in July. At 1530 IST, the August Brent Crude contract on the Intercontinental Exchange was at $67.28 per barrel, up slightly from $67.04 per barrel Monday and $66.47 per barrel Friday.

FORWARDS 

The dollar/rupee forward premium ended higher across the curve Tuesday due to a fall in the benchmark 10-year US Treasury yield, dealers said. However, some banks sold forward dollars at relatively higher levels on the view that forward premiums would fall in coming days, dealers said. They said this capped the rise in premiums.

The benchmark 10-year US Treasury yield was around 4.45% in early European trade Tuesday, down from Monday's close of 4.49% and 4.51% on Friday. While market participants see the one-year dollar/rupee forward premium falling in the coming days, they expect the fall to be limited due to multiple reasons. First, the Reserve Bank of India, after cutting the repo rate by 50 basis points Friday, is not expected to go for another rate cut soon. Therefore, the interest rate differential between the US and India is not seen coming down more for a while now, dealers said.

Second, there is still no clarity on when and by how much the US Federal Reserve would cut interest rates. A few dealers said the fall in the dollar/rupee forward premium in shorter tenures is likely to be limited as they expect the liquidity surplus in the banking system to narrow in a few days.

At 1530 IST, the exact-period dollar/rupee forward contract was 155.25 paise, up from 152.28 paise at Monday's close. On an annualised basis, the premium ended at 1.81%, up from the previous close of 1.78%.

OUTLOOK

On Wednesday, the rupee may receive support from expected foreign fund inflows into domestic equities, dealers said. Market participants await the release of the US retail sales data for the week ended Saturday, due later in the day. Market participants will keep an eye on any developments related to the US-China trade talks, dealers said. The Indian unit will also take cues from the movement in the dollar index and crude oil prices, they said. 

"There has been considerable noise around US–China trade negotiations, but progress remains elusive," Banerjee said in the note. "As long as the US continues to prioritise an 'America First' agenda under the Trump administration, a comprehensive trade deal with China—or even with Europe—appears unlikely. Instead, we foresee a structural 'trade reset' rather than a resolution."

Continued dollar purchases by oil marketing companies could weigh on the Indian currency Wednesday, dealers said. However, in case of a sharp fall in the rupee, dealers expect the RBI to intervene in the foreign exchange market by selling dollars. The rupee is expected to trade between 85.40 and 85.80 against the dollar Wednesday. Dealers peg key technical resistance at 85.50 against the greenback. 

India Rupee - World FX: Sterling falls as UK unemployment rate rises

MUMBAI – The pound sterling fell 0.5% against the dollar after data showed that unemployment in the UK in Feb-Apr rose to the highest level since 2021. This strengthened hopes of more rate cuts by the Bank of England. The unemployment rate increased to 4.6% from 4.5% in the previous three-month period. Growth in salaries slowed to 5.2% in Feb-Apr. 

The dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 99.12 at 1457 IST, a tad higher than 99.00 Monday, but slightly below 99.20 Friday. Market participants await details of the US-China trade talks held in London. US President Donald Trump Monday said he had been receiving a "good response" from his team. Market participants also await US CPI data on Wednesday. 

The Japanese yen fell 0.1% against the US currency. According to reports, Bank of Japan Governor kazuo Ueda said the central bank had limited room to boost the economy through policy rate cuts in case growth comes under pressure. Stating that the Bank of Japan's priority was still to bring inflation to the 2% target, Ueda said underlying inflation was still absent.

The euro was steady against the greenback. European Central Bank Governing Council member Francois Villeoy de Galhau said Tuesday that the current uncertain environment demanded a flexible approach, and the central bank would be data-driven. The Australian dollar fell 0.1% against the greenback due to slight strength of the greenback. 

The Canadian dollar was steady as slight strength of the dollar was offset by an increase in crude oil prices. Oil prices rose as traders were hopeful of a positive outcome from the US-China trade talks this week. This outweighed the decision by the Organization of the Petroleum Exporting Countries to increase oil output in July.  (Sourabh Kumar)

India Rupee: Steady as oil companies' dollar buys offset likely FX inflows

MUMBAI – The rupee remained steady against the dollar as some oil marketing companies purchased the greenback, which offset the likely foriegn fund inflows into Indian financial markets, dealers said. The dollar index inched slightly higher, which weighed on the rupee, dealers said. 

"Since morning, oil companies are buying (dollars) heavily," a dealer with a foreign bank said. "They start buying immediately when (dollar/rupee) levels come down. Some banks are also selling at higher levels just to make profits."

Oil marketing companies purchased the greenback noting a rise in oil prices, and on expectations that prices may continue to increase, dealers said. Since crude is a major commodity that India imports, a rise in its prices increases the country's import bill, putting pressure on the domestic currency, dealers said. At 1409 IST, the August Brent Crude contract on the Intercontinental Exchange was at $67.19 per barrel, up slightly from $67.04 per barrel Monday and $66.47 per barrel Friday.

Some banks sold dollars at relaively higher dollar/rupee rates, likely for foreign fund inflows in equities, dealers said. Meanwhile, the dollar index inched up slightly to 99.21 at 1410 IST from 99.00 Monday. However, it was broadly steady from Friday's 99.20. Market participants now await the release of US CPI data Wednesday, which could provide cues to the health of the US economy. A poll by Dow Jones showed US CPI may have risen 0.2% on month in May; annually, it is projected to rise 2.4%.

During the day, the rupee is seen moving in a range of 85.50 and 85.70 against the dollar. Dealers peg key technical resistance for the Indian unit at 85.55 per dollar.  (Sourabh Kumar)

India Rupee: Premium up tracking fall in US yield; market awaits US CPI Wed

MUMBAI – The dollar/rupee forward premium rose across the curve Tuesday due to a fall in the benchmark 10-year US Treasury yield, dealers said. However, some banks sold forward dollars at relatively higher levels on the view that forward premiums would fall in coming days, dealers said. They said this capped the rise in premiums.

"Some paying is coming in around 1.77% as US yields fell slightly, but again a few people are receiving at higher levels," a dealer with a foreign bank said. "There is also some profit-making going on, some private banks are paying." The benchmark 10-year US Treasury yield was around 4.45% in early European trade Tuesday, down from Monday's close of 4.49% and 4.51% on Friday.

At 1312 IST, the one-year exact-period dollar/rupee forward premium was 154.88 paise, up from 152.28 paise Monday, but lower than 156.10 paise Friday. On an annualised basis, the premium was 1.81%, up from 1.78% Monday, but down from Friday's 1.82%.

While market participants see the one-year dollar/rupee forward premium falling in the coming days, they expect the fall to be limited due to multiple reasons. One is that the Reserve Bank of India, after cutting the repo rate by 50 basis points Friday, is not expected to go for another rate cut soon. Therefore, the interest rate differential between the US and India is not seen coming down more for a while now, dealers said. The change in stance by the RBI's Monetary Policy Committee also limited the fall in premiums, dealers said. 

At the same time, there is still no clarity on when and by how much the US Federal Reserve would cut interest rates. For now, market participants are looking at US CPI data, to be released Wednesday, which, along with a few other data points, could act as a key catalyst for further movement of dollar/rupee forward premium for the rest of the month. A poll by Dow Jones showed US CPI may have risen 0.2% on month in May; annually, it is projected to rise 2.4%. If consumer prices rise more than expectation, dealers expect the dollar/rupee forward premium to come down a bit, as a higher than expected US CPI may weigh on chances of a rate cut in the US.

However, market participants do not expect the dollar/rupee forward premium to come down a lot this month. "I think 1.75% should be the limit on the downside, because people would be waiting to know what happens after US tariff pause ends," a dealer with another foreign bank said. 

A few dealers said the fall in dollar/rupee forward premium in shorter tenures is also likley to be limited as they expect the liquidity surplus in the banking system to narrow in a few days. While a section of the market thinks that despite a fall in liqudity surplus, it would be comfortable for the market, others say there are chances that the liqudity surplus may fall below comfortable levels. "I believe liquidity (surplus) around INR 2 trillion is comfortable, and after the tax outflow, it may come down to INR 1 trillion," the dealer with the foreign bank said. "It could also go below INR 1 trillion, and that would be uncomfortable for the market."  (Sourabh Kumar)

India Rupee: Technical levels for rupee - Jun 10

MUMBAI – At 1044 IST, the rupee was at 85.5225 per dollar. At 0900 IST, the rupee was at 85.6100 a dollar, against the previous close of 85.6200. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Gowri Lakshmi)

India Rupee: Up slightly on likely FX inflows; volume remains thin

MUMBAI – The rupee rose slightly against the dollar Tuesday, likely due to some foreign fund inflows, dealers said. Volume in the currency market remained thin due to lack of significant cues, they said.

"Market is pretty cold. At at these levels, even importers aren't hedging. And there are no important data points lined up, we are seeing INR appreciation for the day," a dealer at a state-owned bank said. 

A few banks likely sold the greenback in early trade on behalf of foreign portfolio investors, who wanted to invest in domestic financial markets, dealers said. However, dealers said the foreign fund inflows were "mild" and might not significantly impact dollar/rupee levels. 

So far in June, FPIs have withdrawn $1.17 billion from domestic financial markets.

Market participants are now waiting for details of the US-China trade talks held in London. US President Donald Trump said Monday that he has been receiving a "good response" from his team in London. At the meeting, US Treasury Secretary Scott Bessent, US Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer held talks with their Chinese counterparts led by Chinese Vice Premier He Lifeung. 

The talks between Washington and London will resume for the second day in London later on Tuesday in hope of securing control of the export of rare earth minerals, media reports said. Currently, China holds near-monopoly over rare earth magents, a crucial component in electric vehicles.  

A weak US dollar also supported the rupee, dealers said. The dollar index remains steady but broadly weak ahead of the US inflation print on Wednesday. At 0936 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.1, steady from its previous close of 99.00 and 99.20 Friday. 

During the day, the rupee is seen moving in a range of 85.40 and 85.80 against the dollar. Dealers peg key technical resistance for the Indian unit at 85.45 per dollar.  (Gowri Lakshmi)

India Rupee: Expected range for rupee - Jun 10

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

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