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Informist, Wednesday, Jun. 18, 2025

By Pratiksha

NEW DELHI - The rupee ended at a ten-week low against the dollar on Wednesday as the ongoing geopoliticial tensions in West Asia prompted importers and foreign portfolio investors to continue buying the greenback, dealers said. The Reserve Bank of India likely stepped in through dollar sales to support the Indian currency, but the nature of intervention was not aggressive in nature, they said. 

"Most of the depreciation (in rupee) we are seeing is due to what is happening on the global front. If things escalate, we will definitely see more fall (in rupee)," a dealer at a private bank said. "The RBI is also keeping a very light touch and only targetting volatility."

After moving in a range of 29 paise during the day, the rupee settled at 86.4775 a dollar on Wedneaday, against 86.2400 on Tuesday. With a fall of 0.3% against the US unit, the rupee was the second worst performer amongst its Asian peers. Other emerging market currencies fell 0.1-0.5%, with the Phillipine peso being the worst hit. 

The Indian unit began the day on a weak note as crude oil prices settled almost 4% higher on Tuesday with the conflict between Israel and Iran escalating. Worries over the involvement of the US military in the conflict increased as it deployed more fighter aircraft in West Asia.

US President Donald Trump Tuesday called for an unconditional surrender by Iran and warned that the US' patience was wearing thin. A rise in crude oil prices increases India's import bill, which subsequently weighes on the Indian currency. At 1530 IST, the August Brent crude oil contract on the Intercontinental Exchange was at $75.88 per barrel, against $76.45 a bbl Tuesday and $73.23 a bbl on Monday. 

"...rising crude prices and a cautious FII (foreign institutional investor) stance amid ongoing Middle East (West Asia) geopolitical tensions weighed on sentiment," Jateen Trivedi, VP research analyst - commodity and currency at LKP Securities, said in a note. "The currency is expected to remain volatile in the range of 85.75 to 86.85, with global risk factors and trade uncertainties exerting pressure." 

Shortly after opening, the local unit gave up most of its losses as some foreign banks sold dollars for foreign fund inflows, likely into a corporate, dealers said. However, as the rupee touched the day's high of 86.2650 a dollar, banks rushed to buy dollars on behalf of oil and other importers, looking to make the most of the relatively lower dollar/rupee levels, which weighed on the Indian unit, dealers said. 

Some banks also bought the greenback on behalf of oil marketing companies, noting the surge in crude oil prices, they said. "At this point nobody really knows how far the rupee will go on the lower side with the crude picture still evolving everyday," said a dealer at a state-owned bank. "So demand (for dollars) is good in the market. Importers are active at whatever dips (in dollar/rupee) they are getting."

The rupee was also weighed by some state-owned banks' dollar buying ahead of daily reference rate fixing, dealers said. "We saw heavy buying (of dollars) at fixing window today," a dealer at a private bank said. 

Banks also bought the greenback on behalf of FPIs, who wanted to pull out funds from Indian markets, amid the ongoing geopolitical tensions in West Asia, dealers said. So far in June, FPIs have withdrawn funds worth $1.95 billion from domestic markets on a net basis. 

Meanwhile, the central bank likely intervened through dollar sales in the market sporadically during the day, which prevented the Indian unit from falling further, dealers said. State-owned banks sold the greenback, likely on behalf of the RBI at multiple dollar/rupee levels, they said. However, the central bank's intervention was mild in nature, according to dealers. 

"RBI was there around 86.40 firstly in the morning and then in the second half they tried, maybe came around 86.50. But I don't think they are trying to protect any level," a dealer at a foreign bank said. 

During the last leg of trade, some banks also sold the greenback on behalf of exporters, who wanted to take advantage of the relatively higher dollar/rupee levels, helping the domestic currency erase some losses, dealers said. 

Market participants also excercied caution ahead of the outcome of the Federal Open Market Committee meeting, due later in the day, dealers said. According to the CME FedWatch tool, traders see a 99.9% probability of the Fed keeping the Fed funds rate steady at 4.25-4.50%. The dollar index was broadly steady ahead of the policy outcome. 

FORWARDS

Premium on the one-year dollar/rupee forward contracts ended higher across tenors Wednesday tracking a fall in US Treasury yields, dealers said. However, some exporters sold dollars for forward delivery to take advantage of the relatively higher levels, which limited gain in the premiums, they said. 

Banks also purchased dollars for forward delivery, noting arbitrage between onshore forwards and the offshore non-deliverable forwards rate, supporting premiums ,dealers said. Banks executed sell/buy swaps--sell for immediate delivery and buy for delivery later--in the onshore forwards market. 

The yields on benchmark US Treasury notes ended lower Tuesday after the retail sales fell more than expected in May, hinting at a softening US economy. Data released Tuesday showed retail sales in May dropped for the second consecutive time, falling 0.9%, the steepest drop since January. Economists in a Reuters poll had estimated a 0.7% fall in retail sales. Forwards of a currency pair are reflective of the interest rate differential between the two countries. 

At 1530 IST, the premium on the one-year, exact-period dollar/rupee forward contract was 158.59 paise, against 155.64 paise at Tuesday's close. On an annualised basis, the premium was 1.82%, against the previous close of 1.80%. 

OUTLOOK

On Thursday, the rupee will take cues from movement in the dollar index after the outcome of the US Federal Reserve's policy meeting later in the day, dealers said. Market participants await further cues on the Fed's rate trajectory as the US central bank will also release its rate dot plot.

The local unit will also take cues from movement in crude oil prices as the West Asia conflict evolves further, dealers said. They expect FPIs to continue to withdraw funds from the domestic market as sentiment remains jittery amid the geopoliticial tensions in West Asia. 

"I think the broad move will remain on the higher side (for dollar/rupee). What remains to be seen is how much the RBI is willing to intervene at this point," said a dealer at a private sector bank. "If they (RBI) remain conservative in intervening, rupee can easily touch 87.00 in next few days."

However, the RBI is expected to continue intervening in the spot market through dollar sales in case the rupee falls sharply, dealers said. The rupee is expected to trade between 86.20 and 86.70 against the dollar. Dealers peg key technical support for the Indian unit at 86.60 a dollar.

India Rupee - World FX: Dollar index remains steady ahead of US FOMC outcome

MUMBAI – The dollar index was steady but continued to remain weak ahead of the US Federal Open Market Committee's policy decision, due later in the day. According to the CME FedWatch tool, traders see a 99.9% probability of the US Fed holding the rate steady at 4.25-4.50%. Market participants also await the US initial jobless claims data for the week ended Saturday, also due later in the day. 

The dollar index was slightly weighed on by a weaker-than-expected retail sales data for May, which showed the US economy was likely softening. Data published on Tuesday showed US retail sales in May dropped for the second consecutive month and fell 0.9%, the steepest drop since January, while core retail sales rose 0.4%. Economists in a Reuters poll had estimated a 0.7% fall.

At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.63, nearly steady from the previous close of 98.82 but higher than 98.14 Monday. The Australian dollar and the New Zealand dollar were up 0.4% and 0.3%, respectively, owing to the broad-based weakness in the US currency. 

The Japanese yen was up 0.2% against the greenback. Data published earlier in the day showed that Japan's exports fell in May for the first time in eight months as automakers were hit by the sweeping tariffs by the US. Exports in May fell 1.7% on year, while imports rose 7.7%. Japan's Prime Minister Shigeru Ishiba said Tuesday that Tokyo has not reached a comprehensive tariff agreement with Washington as some dispute between the two countries continue to persist. 

"Both Japan and the United States have continued sincere discussions, exploring the possibility of an agreement until the last moment," Ishiba said, but added that points of disagreement between the two sides remain.

The Canadian dollar was up 0.1% against the greenback. Traders will keenly assess Bank of Canada Governor Tiff Macklem's speech later in the day to get more insights into the state of economy and the central banks' policy outlook. The Swiss franc rose 0.2% against the US currency on likely safe-haven flows. The Swiss National Bank is set to announce its monetary policy decision Thursday, when the central bank is expected to bring down the benchmark rates by 25 basis points to 0.00%. 

The pound sterling was up 0.2% against the greenback. However, gains in the currency were capped after UK's inflation cooled to 3.4% in May, as widely expected by the Bank of England. The Bank of England will announce its policy decision Thursday and is likely to hold the benchmark lending rates steady.  (Gowri Lakshmi)

India Rupee: Fwd premiums up on fall in US ylds, onshore-offshore arbitrage

MUMBAI – Premiums on the one-year dollar/rupee forward contract rose across tenors Wednesday tracking a fall in US Treasury yields, dealers said. However, some exporters sold dollars for forward delivery to take advantage of the relatively higher levels, which limited gains in the premiums, they said. The one-year exact period dollar/rupee forward premium fell close to an 11-month low Tuesday.

Banks also purchased dollars for forward delivery, noting arbitrage between onshore forwards and the offshore non-deliverable forwards rate, supporting premiums ,dealers said. Banks executed sell/buy swaps--sell for immediate delivery and buy for delivery later--in the onshore forwards market. "There is paying largely tracking UST (US Treasury yields)," a currency trader at a broking firm said. "There was some arbitrage-taking in NDF (non-deliverable forwards) market as well."

The yields on benchmark US Treasury notes ended 7 basis points lower Tuesday after the retail sales data for May hinted at a softening of the US economy. Data published Tuesday showed retail sales in May dropped for the second consecutive time, falling 0.9%, the steepest drop since January, while core retail sales rose 0.4%. Economists in a Reuters poll had estimated a 0.7% fall in retail sales.

Market participants now await the US Federal Open Market Committee's policy decision due later Wednesday. According to the CME FedWatch tool, traders see a 99.9% probability of the Fed holding the Fed funds rate steady at 4.25-4.50%. Forwards of a currency pair are reflective of the interest rate differential between the two countries. 

At 1442 IST, the premium on the one-year, exact-period dollar/rupee forward contract was 158.58 paise, against 155.64 paise at Tuesday's close. On an annualised basis, the premium was 1.82%, against the previous close of 1.80%.  (Gowri Lakshmi)

India Rupee: Sharply down on FPI outflows; likely RBI dollar sales limit fall

MUMBAI – The rupee was sharply down against the dollar as banks purchased the greenback on behalf of importers and foreign portfolio investors, dealers said. However, likely dollar sales by public sector banks on behalf of the Reserve Bank of India limited the fall in the rupee, they said. 

"I think nats (nationalised banks) are selling, 86.50 is a very crucial level, RBI will likely not let it fall to that level soon," a dealer at a private sector bank said. 

The rupee has been under pressure since this morning as overseas investors continued to withdraw funds from Indian financial markets and move to other safe-haven assets owing to rising tensions between Israel and Iran, dealers said. At 1313 IST, the benchmark equity indices, the Nifty 50 and the BSE Sensex, were down 0.2%, each.  

On Wednesday, Israel and Iran continued to launch fresh strikes, with Iran launching about 10 ballistic missiles towards Israel earlier in the day. Similar explosions were heard in Tehran as well, Iranian media outlets reported. This triggered further worries amongst investors about disruption in the global supply-chain and rise in crude oil prices. 

"Outflows due to (West Asia) tensions are there, and there is some dollar demand from importers, not panicking but still very actively buying," a dealer at a foreign bank said.

The rupee was also weighed down by dollar purchases from a few importers who were wary of a further fall in the Indian unit, dealers said. The rupee touched a 10-week low of 86.4825 during the day. Importers remained on the sidelines in early trade, hoping for an appreciation in the rupee, but since the rupee remained under constant pressure, a few importers stepped in at current levels, dealers said. 

A sharp fall of the rupee was also limited as some exporters sold the greenback at 86.30 and below, to take advantage of the relatively higher dollar/rupee levels, dealers said.

For the rest of the day, the rupee is seen moving in a range of 86.20-86.60 against the dollar. Dealer peg key immediate support for the Indian unit at 86.50 against the greenback.  (Gowri Lakshmi)

India Rupee: Technical levels for rupee - Jun 18

MUMBAI – At 1110 IST, the rupee was at 86.3400 per dollar. At 0900 IST, the rupee was at 86.3650 a dollar, against the previous close of 86.2400. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Gowri Lakshmi)

India Rupee - Asia FX: Most down; dollar index steady ahead of US FOMC outcome

MUMBAI – Most Asian currencies traded lower against the greenback Wednesday as investors continued to assess the ongoing geopolitical tensions in West Asia. Early Wednesday, Iran launched about 10 ballistic missiles towards Israel while similar explosions were also heard in Tehran. Meanwhile, US President Donald Trump called for an unconditional surrender by Iran and warned that the US' patience was wearing thin.

"We know exactly where the so-called 'Supreme Leader' is hiding," Trump wrote on Truth Social. "We are not going to take him out (kill!), at least not for now...Our patience is wearing thin."

The dollar index was steady but continued to remained weak. Market participants are now waiting for the US Federal Open Market Committee's policy decision, due later in the day. According to the CME FedWatch tool, traders see a 99.9% probability of the US Fed holding the Fed funds rate steady at 4.25-4.50%.

Further, data published on Tuesday showed that US retail sales dropped for the second straight month in May and fell to the lowest level since January. US retail sales in May fell 0.9%, below the analyst estimate of a 0.7% fall in a Reuters poll. The weaker-than-expected data suggests softening of the US economy. 

At 1001 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.70, steady from the previous close of 98.82 but higher than 98.14 Monday. 

The Taiwan dollar and the Malaysian ringgit were down 0.1% against the greenback and the Indonesian rupiah was down 0.2%. Traders await the policy decision by Bank Indonesia, which is widely expected to keep rates steady. 

The Philippine peso was down 0.2%. Philippine's central bank is scheduled to announce their latest monetary policy decision Thursday and is expected to cut 25 basis points and bring the benchmark rates to 5.25%. The Thai baht traded flat against the greenback. Data published earlier in the day showed that Thailand's exports jumped 18.4 on year in May. The reading came above the analyst forecast of 6.7% in a Reuters poll and the 10.2% rise in April. 

Further, Thailand's commerce minister said the trade talks with the US are making good progress and expressed confidence in reaching a bilateral trade agreement that could lower the tariffs to as low as 10%. 

The Chinese yuan also traded flat against the dollar. The South Korean won was up 0.2% against the greenback amid rising optimism after South Korean President Lee Jae-myung's nominee for prime minister said that Lee hopes for a trade agreement with the US ahead of the looming Jul. 9 deadline after a high-stakes meeting with Trump was called off at the last minute. 

"I believe that President Trump would naturally expect a deal to be reached within the scheduled deadline, and my understanding is that President Lee Jae-myung would also like to see a good agreement reached within that time frame if possible," Kim Min-seok said Tuesday.  (Gowri Lakshmi)

India Rupee:Tad down on FPI outflows; dlr index steady ahead of FOMC outcome

MUMBAI – The rupee was slightly lower against the dollar Wednesday as banks purchased the greenback on behalf of foreign portfolio investors, looking to withdraw funds from Indian financial markets, dealers said. As the Israel-Iran conflict entered the sixth day, investors were moving towards safe-haven assets, dealers said. The rupee fell to a 10-week low of 86.3700 shortly after the market opened.

"This general outflows have become a norm now, tensions in the region (West Asia) definitely weighing on investor sentiment and on oil prices as well," a dealer at a public sector bank said. So far in June, overseas investors have withdrawn $1.95 billion from Indian markets.

A few dealers said even though worries about a sharp rise in crude oil prices persist, most importers remained on the sidelines in early trade, hoping the rupee would rise later in the day. "Importers at this level are not active. They are hoping and will come if rupee comes down to 86.10 (a dollar)," the dealer said. 

The rupee came under pressure as investor sentiment turned jittery with strikes by Israel and Iran on each other leading to concerns about damage and disruption to important oil and gas insfrastructure in the region. On Wednesday, Israel and Iran continued to launch fresh strikes, with Iran launching about 10 ballistic missiles towrds Israel in early hours of the day. Similar explosions were heard in Tehran as well, Iranian media outlets reported. Meanwhile, US President Donald Trump called for an unconditional surrender by Iran and warned that the US' patience was wearing thin.

Due to persistent dollar demand from overseas investors, the rupee fell to a low of 86.3700 a dollar, the lowest level since Apr. 9. Many dealers speculated that a few public sector banks sold the greenback, likely on behalf of the Reserve Bank of India, to prevent the rupee from falling sharply.

The dollar index remained steady ahead of the US Federal Open Market Committee's policy decision late on Wednesday. According to the CME FedWatch tool, traders see a 99.9% probability of the US Fed holding the Fed Funds rate steady at 4.25-4.50%. At 0954 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.70, broadly steady from the previous close of 98.82 but higher than 98.14 Monday. 

During the day, the rupee is seen moving in a range of 86.20 and 86.50 against the greenback. Dealers peg immediate support for the Indian unit at 86.40 a dollar.  (Gowri Lakshmi)

India Rupee: Expected range for rupee - Jun 18

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)

End

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

Edited by Vandana Hingorani

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