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Informist, Thursday, Jun. 19, 2025

By Sourabh Kumar

NEW DELHI – The rupee closed at an over three-month low against the dollar as importers continuously bought dollars with tensions escalating in West Asia, dealers said. However, the fall of the Indian currency was limited as the Reserve Bank of India is said to have intervened in the foreign exchange market by selling dollars, dealers said.

"It (rupee) touched 90 (86.90 a dollar), but then some (dollar) selling came in from the central bank and then there were a few exporters," a dealer with a foreign bank said. Weakness in Asian currencies against the dollar also put pressure on the rupee, dealers said. Asian currencies fell 0.2% to 0.9% Thursday, with the Philippines peso the worst hit.

The Indian rupee settled at 86.7225 a dollar against 86.4775 Wednesday. The intraday movement of 50 paise was the highest in nearly four weeks.

The rupee opened the day slightly lower against the dollar and moved further down until the RBI intervened in the currency market, dealers said. Importers started purchasing dollars since early in the day on fears that the rupee may come under more pressure if the US decides to side Israel in its attacks on Iran, dealers said.

"I may do it. I may not do it. I mean, nobody knows what I'm going to do," US President Donald Trump said Wednesday, to a question on whether the US would join the conflict between Israel and Iran. Meanwhile, Iran's Supreme Leader Ayatollah Ali Khamenei rejected the US president's demand for an unconditional surrender.

The conflict has pushed crude oil prices higher, which also weighed on the rupee, dealers said. At 1530 IST, the August Brent Crude contract on the Intercontinental Exchange was at $76.98 per barrel, up from $76.70 Wednesday and $76.45 Tuesday. Rise in crude oil prices increases India's import bill, given that the commodity constitutes a major chunk of its imports. This increase in import bill exerts pressure on the Indian currency.

Oil marketing companies also increased their dollar purchases on fears that the crude oil price may rise more. "I think if the US also joins Israel in the conflict, then the crude could go to around $90 a barrel, which could push the rupee below 87 a dollar," a dealer with a foreign bank said. Crude oil prices rose Thursday after Israel said it struck Iran's nuclear sites in Natanz and Arak overnight.

The dollar index remained slightly higher throughout the day, which also weighed on the rupee, dealers said. The index, which measures the strength of the greenback against a basket of six major currencies, was at 98.93 at 1530 IST, up from 98.85 Wednesday and 98.82 Tuesday. The US Federal Open Market Committee Wednesday unanimously voted to keep the federal funds target range unchanged at 4.25-4.50%. Fed officials retained their guidance of 50 basis points cut in the benchmark rate in 2025, but slowed the pace of expected rate cuts next year.

Data released Wednesday showed initial state unemployment benefit claims in the US fell 5,000 to a seasonally adjusted 245,000 in the week ended Saturday, in line with a forecast by economists polled by Reuters.

Overall volume in the currency market was low in the initial few hours because the US market is closed Thursday on account of Juneteenth National Independence Day. However, the volume recovered when the rupee fell more in the day, dealers said.

"After the rupee hit 65-70 (86.65-86.70 a dollar), volumes increased, because importers who were hoping some supply would come in, also started buying," a dealer with a state-owned bank said. While some importers were buying dollars since the opening of the market, a few importers waited for the dollar/rupee to come down before buying in considerable quantum, dealers said.

These importers hoped that the RBI might prevent the rupee from falling below 86.60 a dollar by selling the greenback, dealers said. However, the rupee kept falling steadily, and later multiple stop-losses were triggered on short dollar bets around 86.80 a dollar, and the overall volume in the currency market rose, dealers said.

Due to persistent dollar buying, the rupee hit 86.8925 a dollar, the lowest since Mar. 17. It was at this level, when the central bank intervened in the currency market by selling dollars to prevent it from falling further, dealers said. However, the intervention was not aggressive in nature, dealers said.

Exporters were waiting for the rupee to fall more, but when the RBI's intervention limited the fall to around 86.89 a dollar, exporters also started selling the greenback, taking advantage of relatively higher dollar/rupee rates, dealers said.

FORWARDS

Premium on the one-year dollar/rupee forward contract ended higher as banks purchased dollars for forward delivery, taking advantage of the arbitrage opportunity between onshore forward premiums and offshore non-deliverable forward premiums, dealers said. Some importers also purchased forward dollars after the rupee came under pressure in the spot market.

Moreover, the yield on the benchmark 10-year US Treasury note did not move much Wednesday, closing 1 basis points lower at 4.38%. Forwards of a currency pair are reflective of the interest rate differential between the two countries.

Market participants expect forward premiums to rise further, should there be an escalation in the Israel-Iran conflict or if the US joins Israel in its strikes on Iran. An escalation in conflict in West Asia could put pressure on the spot dollar/rupee rate, and if the rupee falls sharply in the spot market, importers might increase forward dollar purchases, driving forward premiums higher, dealers said.

At 1530 IST, the premium on the one-year, exact-period dollar/rupee forward contract was 161.57 paise, up from 158.59 paise Wednesday. On an annualised basis, the premium was 1.86%, up from the previous close of 1.82%.

OUTLOOK

On Friday, the rupee will take cues from movement of the dollar index and crude oil prices. Any escalation in the Israel-Iran conflict could put pressure on the rupee, dealers said. The local unit will also take cues from movement of crude oil prices as the West Asia conflict escalates, dealers said. They expect foreign portfolio investors to withdraw funds from the domestic market, should the geopolitical situation in West Asia worsen.

"Nobody wants to be short right now, and I think we may see some 50 paise movement (fall in the rupee), if there is any indication that the US may get involved militarily," a dealer with a foreign bank said.

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 86.40 and 86.95 against the dollar. Dealers peg key technical support for the Indian unit at 86.90 a dollar.

India Rupee - World FX: Swiss franc up post rate decision; BoE outcome eyed

NEW DELHI – The Swiss franc rose 0.4% against the dollar as the Swiss National Bank Thursday did not indicate a further rate cut after cutting the benchmark rates by 25 basis points to 0.0%. The franc also rose on increased demand for safe-haven assets due to the ongoing conflict in West Asia.

There is now uncertainty about whether the US will be dragged into the Israel-Iran conflict. Answering a question on the probability of the US joining Israel in strikes on Iran, US President Donald Trump said, "I may do it. I may not do it. I mean, nobody knows what I'm going to do." Meanwhile, Iran's Supreme Leader Ayatollah Ali Khamenei rejected the US president's demand for an unconditional surrender.

The dollar index rose slightly after the US Federal Open Market Committee kept the benchmark rate unchanged. The US FOMC Wednesday unanimously voted to keep the federal funds target range unchanged at 4.25-4.50%. Fed officials retained their guidance of 50 basis points cut in the benchmark rate in 2025, but slowed the pace of expected rate cuts next year.

The dollar index, which measures the strength of the greenback against a basket of six major currencies, was 98.97 at 1421 IST, marginally up from 98.85 Wednesday and 98.82 Tuesday.

The pound sterling was steady ahead of a rate decision by the Bank of England later in the day. The Bank of England is expected to keep the benchmark rates unchanged at 4.25%. However, the sterling could fall, should the Bank of England indicate rate cuts in upcoming meetings.

The euro fell 0.1% against the greenback. European Council member Olli Rehn Thursday said in a column published by Finland's government that a prolonged crisis in the West Asia could lead to stagflation in Europe. "ECB monetary policy now needs vigilance and flexibility, to keep inflation expectations firmly anchored around the 2% target," he said.

Another European Central Bank member, Francois Villeroy de Galhau, said a rate cut in the coming months is more likely. "Barring a major exogenous shock, including possible new military developments in the Middle East, if monetary policy were to move in the next six months, it could be more in the direction of accommodation," Villeroy, said.

The Japanese yen and the Canadian dollar fell 0.1% each against the greenback. The Australian dollar fell 0.5% against the US dollar after data showed an unexpected fall in the number of people employed last month. The total number of employed people in Australia fell by 2,500 in May, against a rise of 87,600 in April. The expectation was of a rise of 20,600 jobs. The unemployment rate remained steady.  (Sourabh Kumar)

India Rupee: Slumps on importers' persistent dlr buys, RBI sales limit fall

NEW DELHI – The rupee slumped against the dollar after importers persistently purchased the greenback on fears that the conflict in West Asia may intensify, leading to a sharper fall of the Indian currency, dealers said. Due to the high demand for dollars, the rupee fell to an over three-month low of 86.8925 against the greenback. Likely intervention by the Reserve Bank of India prevented the rupee from falling more, dealers said.

"Stop-losses got hit above 80 (86.80 a dollar), and all of the market is on buying side," a dealer with a state-owned bank said. "I am thinking if the pace continues, we might see figure (87.00 a dollar) today." Multiple stop-losses were hit above 85.80 a dollar, as per a few dealers. Earlier on Thursday, the rupee fell to 86.7125 a dollar, the lowest since Apr. 9.

Crude oil prices increased Thursday, which also weighed on the rupee, dealers said. At 1345 IST, the August Brent crude contract on the Intercontinental Exchange was at $77.10 per barrel, against $76.70 Wednesday and $76.45 Tuesday. A rise in crude oil price increases India's import bill, putting pressure on the domestic currency.

Oil prices rose Thursday on worries about supply disruptions in case the conflict in West Asia intensifies further. Crude oil prices increased Thursday after Israel said it struck Iran's nuclear sites in Natanz and Arak overnight. 

A few dealers said the Reserve Bank of India is likely to have intervened in the currency market by selling dollars at around 86.90 a dollar to prevent the rupee from falling further. Noting the intervention, a few exporters who were waiting for the rupee to fall further, also sold dollars, dealers said. This also supported the rupee, dealers said. 

During the day, the rupee is seen moving in a range of 86.50 and 86.95 against the greenback. Dealers peg immediate support for the Indian unit at 86.90 a dollar.  (Sourabh Kumar)

India Rupee: Sharply dn on persistent dollar buys by importers; volumes low

NEW DELHI – The rupee continued to fall and was sharply lower against the dollar, driven by purchases of the greenback by importers amid the ongoing conflict in West Asia, dealers said. Since overall volume in the market was lower than usual, even a slight increase in the quantum of dollar purchases led to an excessive dollar/rupee movement, dealers said.

"There is some increase in the demand, but again, since the volume is less we are seeing the impact more," a dealer with a private sector bank said. "Also, bid-ask spread has widened to around 2-3 paise." Overall volume in the foreign exchange market was low Thursday as financial markets in the US are closed.

Importers purchased dollars fearing that the rupee may fall more amid the ongoign Israel-Iran conflict. Some reports hinted at a possible intervention by the US over the weekend in support of Israel. It caused a few importers to increase the quantum of their dollar purchases, pushing the rupee further down, as per some dealers.

Crude oil prices rose Thursday on worries over supply disruptions in case the conflict in West Asia intensifies further, which weighed on the rupee, dealers said. At 1246 IST, the August Brent crude contract on the Intercontinental Exchange was at $77.47 per barrel, against $76.70 Wednesday and $76.45 Tuesday. The rupee fell to 86.7125 a dollar earlier Thursday, the lowest since Apr. 9. 

Limiting the fall of the rupee, some dealers speculated that the Reserve Bank of India might have sold dollars, albeit in small quantums. Dealers said the central bank's intervention might have been just to slow the pace of the fall in the rupee, rather than restricting it to a specific level. A few exporters also sold dollars, which prevented the rupee from falling sharply. However, most exporters are likely to wait for the rupee to fall more before selling dollars in large quantums, dealers said.

During the day, the rupee is seen moving in a range of 86.50 and 86.75 against the greenback. Dealers peg immediate support for the Indian unit at 86.75 a dollar.  (Sourabh Kumar)

India Rupee: Premium tad up; bks buy fwd dlrs on onshore-offshore arbitrage

NEW DELHI – The one-year dollar/rupee forward premium rose slightly Thursday as some banks purchased dollars for forward delivery, taking advantage of the arbitrage opportunity between onshore forward premiums and offshore non-deliverable forward premiums, dealers said. 

"The forward market is also not very active today because of the US holiday, though there is some paying because of onshore-offshore arbitrage," a dealer with a foreign bank said. US financial markets are closed Thursday on account of Juneteenth.

The one-year exact period dollar/rupee forward premium was 1.83% at 1112 IST, slightly higher than 1.82% on Wednesday and 1.80% Tuesday. On an absolute basis, the premium was 158.57 paise, not much changed from 158.59 paise Wednesday and 155.64 paise Tuesday.

Moreover, the yield on the benchmark 10-year US Treasury yield did not move much Wednesday, closing 1 basis points lower at 4.38%. Forwards of a currency pair are reflective of the interest rate differential between the two countries, dealers said. The 10-year US Treasury yield was little changed after the US Federal Open Market Committee kept benchmark rates unchanged Wednesday. The committee unanimously voted to keep the federal funds target range unchanged at 4.25-4.50%. Fed officials retained their guidance of 50 basis points of cut in the benchmark rate in 2025, but expect a slower pace of rate cuts next year. 

Market participants expect forward premium to rise further, should there be an escalation in the Israel-Iran conflict or if the US joins Israel in its strikes. An escalation in the conflict in West Asia could put pressure on the spot dollar/rupee rate, and if the rupee falls sharply in the spot market, importers might increase forward dollar purchases, driving premiums higher, dealers said.

However, most dealers expect the one-year exact period dollar/rupee to rise briefly above 1.90%. At such levels, banks may sell forward dollars in large quantum, dealers said.  (Sourabh Kumar)

India Rupee: Technical levels for rupee - Jun 19

NEW DELHI – At 1006 IST, the rupee was at 86.5450 per dollar. At 0900 IST, the rupee was at 86.5300 a dollar, against the previous close of 86.4775. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Sourabh Kumar)

India Rupee: Slightly lower in early trade as importers buy dollars

NEW DELHI – The rupee fell slightly against the dollar in early trade Thursday, as importers purchased the greenback, fearing that the Indian currency might fall further amid the ongoing conflict in West Asia, dealers said. A fall in most other Asian currencies also weighed on the Indian currency, dealers said. Asian units fell 0.2-0.6%, with the Philippines peso performing the worst.

"There is buying (of dollars) from importers, not specifically from any one section, but largely all are buying," a dealer with a private bank said. Consequently, the rupee hit an over 10-week low of 86.5650 a dollar Thursday. However, the fall of the Indian currency was limited. A few dealers said this could be becuase of intervention by the Reserve Bank of India, which might have sold dollars to support the rupee, albeit in a small quantity.

After Israel launched airstrikes on Iranian nuclear sites, followed by a military response from Iran, uncertainty prevailed among investors on whether the US would also be dragged into the fight against Iran. Answering a question on chances of the US joining Israeli strikes on Iran, US President Donald Trump said, "I may do it. I may not do it. I mean, nobody knows what I'm going to do." Meanwhile, Iran's Supreme Leader Ayatollah Ali Khamenei rejected the US president's demand for an unconditional surrender.

Importers purchased dollars due to fear that the rupee may fall sharply in the coming days if the war between Israel and Iran intensifies, dealers said. The fear among importers exacerbated on the view that the RBI might not aggressively support the rupee, dealers said. The rupee is expected to fall past 87 a dollar, should the US join Israel in its war against Iran, a dealer with a brokerage firm said. The dealer said the rupee could then trade between 87.25 and 88.25 a dollar.

Crude oil prices have remained relatively high, as traders fear the Israel-Iran conflict could impact oil supply. This weighed on the rupee, dealers said. At 0925 IST, the August Brent Crude contract on the Intercontinental Exchange was at $76.52 per barrel, against $76.70 Wednesday and $76.45 Tuesday. On a weekly basis, Brent crude oil prices are up around 10% Thursday. A rise in prices of crude oil increases India's import bill, and exerts pressure on the domestic currency.

A slight rise in the dollar index also put pressure on the rupee, dealers said. The US Federal Open Market Committee Wednesday unanimously voted to keep the federal funds target range unchanged at 4.25-4.50%. Fed officials retained their guidance of 50 basis points of cut in the benchmark rate in 2025, but slowed the pace of expected rate cuts next year. 

The dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 99.00 at 0925 IST, up from 98.85 Wednesday and 98.82 Tuesday. Data showed initial state unemployment benefit claims in the US fell 5,000 to a seasonally adjusted 245,000 in the week ended Saturday, in line with a forecast by economists polled by Reuters. 

While a few dealers speculated that the RBI might be selling dollars in small quantum to support the rupee, most said the support could increase if the rupee falls below 86.60 a dollar. Most exporters did not sell dollars in large quantum, as they waited for relatively higher dollar/rupee rates, dealers said.  

During the day, the rupee is seen moving in a range of 86.40 and 86.60 against the greenback. Dealers peg immediate support for the Indian unit at 86.60 a dollar.  (Sourabh Kumar)

India Rupee - Asia FX: Down as dollar index up; South Korean won falls 0.7%

NEW DELHI – Asian currencies were down against the dollar Thursday, as the dollar index inched up after the US Federal Open Market Committee kept benchmark rates steady Wednesday, and indicated that rate cuts in the future might be slow due to uncertainty around US President Donald Trump's trade policies.

The ongoing conflict in West Asia has kept the dollar index relatively higher. The index, which measures the strength of the greenback against a basket of six major currencies, has risen 1.3% since Jun. 12, a day before Israel started its airstrikes on Iran. The dollar index was at 99.08 at 0833 IST, up from 98.85 Wednesday and 98.82 Tuesday. 

After Israel launched airstrikes on Iranian nuclear sites, followed by a military response from Iran, market participants remained uncertain about whether the US would be involved in Israeli strikes against Iran. Answering a question on whether the US would join Israel in striking Iran, US President Donald Trump said, "I may do it. I may not do it. I mean, nobody knows what I'm going to do." Meanwhile, Iran's Supreme Leader Ayatollah Ali Khamenei rejected the US president's demand for an unconditional surrender.

On Wednesday, the US Federal Open Market Committee unanimously voted to keep the federal funds target range unchanged at 4.25-4.50%. US Fed officials maintained their guidance of a 50 basis points of cut in 2025. Further, data showed initial state unemployment benefits claims in the US fell 5,000 to a seasonally adjusted 245,000 in the week ended Saturday, in line with the forecast of economists polled by Reuters. 

The Taiwan dollar was down 0.1% against the greenback. The country's benchmark stock index, the Taiwan Stock Exchange Capitalization Weighted Stock Index, was down 1.5% in early trade Thursday, which put pressure on its currency. 

The South Korean won fell 0.7% against the greenback, under pressure from a drop in the Korea Composite Stock Price Index, which was down 0.5% early Thursday. The Philippines peso fell 0.6% against the greenback amid the Israel-Iran conflict. The central bank of the Philippines will decide on its benchmark rate Thursday, with expectations of status quo. 

The Indonesian rupiah was down 0.3% against the greenback. The Indonesian central bank kept the benchmark rate unchanged Wednesday, but indicated that a 50 basis points rate cut was still on the table for this year. The Malaysian ringgit and the Thai baht fell 0.3% each against the dollar.  (Sourabh Kumar)

India Rupee: Expected range for rupee - Jun 19

NEW DELHI – Following are the expected support and resistance levels for the rupee on Thursday, as forecast by leading banks and brokerages in an Informist poll:

(Sourabh Kumar, Gowri Lakshmi, and Pratiksha)

End

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

Edited by Ashish Shirke

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