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Informist, Monday, Jun. 23, 2025

By Gowri Lakshmi

MUMBAI – The rupee ended at an over three-month closing low against the dollar as banks persistently purchased the greenback on behalf of oil marketing companies and foreign portfolio investors, dealers said. Foreign banks' dollar sales likely for foreign fund inflows and exporters, however, limited the rupee's fall, dealers said. 

"The buying pressure definitely was from the overall sentiment being hit from the ongoing geopolitical tensions," a dealer at a state-owned bank said. "But the rupee did not fall as much as the market expected so some exporters came and then some likely inflows also supported throughout the day." 

After depreciating 0.2% against the greenback, the Indian unit settled at 86.7450 a dollar, sharply down from its previous close of 86.5850. The Indian unit moved over 19 paise during the day.

Most other Asian currencies also plunged against the greenback owing to the ongoing tariff uncertainties and escalation in geopolitical tensions. Other Asian currencies fell 0.1-1.4% with the South Korean won being the worst hit. The Chinese yuan was the least hit, followed by the rupee.

The rupee started the day sharply lower against the greenback at 86.7600 a dollar as overseas investors rushed to purchase the greenback amid heightened geopolitical escalation in West Asia after the US joined Israel and attacked Iran, dealers said. The rupee was at 86.84 in the offshore non-deliverable forwards market before the domestic spot market opened and some dealers speculated that the Reserve Bank of India may have sold the dollars in the NDF market to prevent the rupee from falling sharply.

On Sunday, the US struck Tehran's three nuclear facilities–-Fordo, Natanz, and Isafahan--dropping 30,000-pound-bunker-buster bombs. In response, Tehran threatened to retaliate and close the Strait of Hormuz, which is an important chokepoint for nearly 20% of global crude oil supply.

This pushed the global crude oil prices to briefly touch a five-month high of $81.39 per barrel in early trade after Iran's Supreme National Security Council said it would take a final decision on whether to close the Strait of Hormuz following the military attacks by the US, Iranian media outlets reoported on Sunday.

The benchmark indices Nifty 50 and BSE Sensex ended 0.6% lower, likley due to overseas investors withdrawing funds from domestic stock market and moving to other safe-haven assets, dealers said. This weighed on the rupee, according to some dealers. So far in June, FPIs have withdrawn funds worth $1.47 billion from the Indian markets.

Further, oil marketing companies, though did not aggressively purchase initially, demanded dollars on rising fears of a sharp rise in crude oil prices, dealers said. At 1530 IST, the August Brent Crude contract on the Intercontinental Exchange was at $77.42 per barrel, a tad up from its previous close of $77.01 per barrel but a tad down from $78.85 per barrel Thursday.

However, aggressive dollar demands from importers' were likely curtailed after India's Petroleum and Natural Gas Minister Hardeep Singh Puri said India's supplies were stable, with oil imports coming through diversified routes, dealers said. "We have diversified our supplies in the past few years and a large volume of our supplies do not come through the Strait of Hormuz now," Puri wrote in a post on social media platform X.

The rupee was also weighed down as the dollar index rose to a near three-week high, owing to likely safe-haven demand amid the ongoing uncertainties, dealers said. At 1530 IST, the dollar index, which measures the strength in the dollar against a basket of six major currencies, was at 99.34, broadly steady from its previous close of 98.77 and 98.78 Thursday. The index rose to 99.42, the highest level since May 30. 

Nevertheless, the rupee was able to recover from the day's low of 86.8550 as a few foreign banks sold the greenback, likely for initial public offering-related foreign fund inflows, dealers said. They said some flows were likely into the HDB Financial Services Ltd.'s IPO, which will open for subscription on Wednesday and close on Friday.

A few exporters also sold the greenback to take advantage of relatively high dollar/rupee levels, which supported the Indian currency, dealers said. "Exporters really expected 87 (a dollar) since it touched 86.90 on Friday, so when they saw it (rupee) appreciating rather, they began selling at the available higher levels," the dealer at the state-owned bank said. 

FORWARDS 

The one-year exact-period dollar/rupee forward premium ended higher after rising to an over one-week high as banks purchased dollars for forward delivery, taking advantage of the arbitrage opportunity between onshore forward and offshore non-deliverable forward rates, dealers said. The yield on benchmark 10-year US Treasury note was unchanged Friday as market participants awaited further clarity on the Iran-Israel conflict.

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 164.76 paise, against 163.05 paise at Friday's close. On an annualised basis, the premium was 1.89%, against the previous close of 1.80%.

OUTLOOK

On Tuesday, the rupee will take cues from the movement in crude oil prices and offshore dollar index, dealers said. The rupee will also take cues from the movement in the Chinese yuan, they said. Market participants will closely watch the developments in West Asia and any comment by Trump on tariffs or the Israel-Iran conflict. 

Dealers expect the rupee to be supported by foreign fund inflows, likely relating to multiple IPOs opened for subscription. However, the rupee may come under some pressure as importers are likely to purchase the greenback, fearing a sharp fall in the rupee, dealers said. Should the rupee come under immense pressure and inch toward the psychologically crucial level of 87-per-dollar mark, public-sector banks will likely step in with dollar sales on behalf of the RBI to prevent the rupee from falling sharply, dealers said. 

During the day, the rupee is seen moving in a range of 86.50-87.00 against the greenback. Dealers peg immediate technical support for the Indian currency at 86.90 a dollar.

India Rupee - World FX: Dollar, Swiss franc rise on safe-haven demand

MUMBAI – The dollar strengthened after the US struck Iranian nuclear sites over the weekend. The US struck three Iranian nuclear sites, increasing concerns about potential retaliation and the impact on global supply chains, especially through the Strait of Hormuz, a key oil and gas transit point. It led to the demand for safe-haven assets.

Sunday, the US dropped 30,000-pound bunker-buster bombs on Iran's Fordow nuclear site while Tel Aviv and Tehran continue to fire missiles at each other. Iran's Supreme National Security Council said it would take a final decision on whether to close the Strait of Hormuz following the military attack by US, after which crude oil prices rallied and briefly touched their highest level in over five months in early trade.

The dollar index, which measures the strength of the greenback against a basket of six major currencies, was 99.06 at 1406 IST, up from 98.77 Friday and 98.78 Thursday. Earlier in the day, the dollar index rose to 99.16, its highest level in nearly two weeks. Due to demand for safe-haven assets, the Swiss franc also strengthened, rising 0.1% against the greenback.

The Japanese yen fell 0.9% against the greenback. The euro fell 0.2% against the dollar as data showed slower-than-expected rise in the eurozone's Purchasing Managers' Index in June. The eurozone June composite flash Purchasing Managers' Index was 50.2, lower than a Dow Jones forecast of 50.5. The June manufacturing Purchasing Managers' Index flash estimate was 49.4, lower than the forecast of 49.7.

The pound sterling was down 0.5% due to the strength of the US dollar. It was down despite the UK's Purchasing Managers' Index rising more than expected. The UK's composite Purchasing Managers' Index rose to 50.7 in June, more than the forecast of 50.5 in a Dow Jones poll. The manufacturing Purchasing Managers' Index was at 47.7, higher than the forecast of 46.6. The Australian dollar and the Canadian dollar fell 0.5% each against the US currency.  (Sourabh Kumar)

India Rupee: Premium rises to over 1-week high on onshore-offshore arbitrage

MUMBAI – The one-year exact-period dollar/rupee forward premium rose to an over one-week high as banks purchased dollars for forward delivery, taking advantage of the arbitrage opportunity between onshore forward and offshore non-deliverable forward rates, dealers said. 

"Some NDF arbitrage was there and there is paying in large quantity by importers. Exporters may only be expected when the spot rupee can fall to 87 (a dollar)," a dealer at a public sector bank said. Importers purchased forward dollars amid concerns of a sharper decline in the spot dollar/rupee rates, dealers said.

"There is no clarity on what the retaliation will be, how long there will be status quo and if Strait of Hormuz will be closed. Until then, market is in a fix," the dealer said. A few banks sold dollars for forward delivery, noting relatively higher forward rates, dealers said. This capped the upward move in forward premiums, dealers said.

The yield on benchmark 10-year US Treasury note was unchanged Friday as market participants awaited further clarity on the Iran-Israel conflict. On Sunday, the US joined Israel and struck three Iranian nuclear facilities by dropping 30,000-pound-bunker-buster bombs. In response, Tehran threatened to retaliate and close the Strait of Hormuz. 

At 1421 IST, the premium on the one-year, exact-period dollar/rupee forward contract was 163.57 paise, against 163.05 paise at Friday's close. On an annualised basis, the premium was 1.88%, against the previous close of 1.80%.  (Gowri Lakshmi)

India Rupee: Pares losses as foreign banks sell dollars for IPO-linked inflow

MUMBAI – The rupee erased some losses against the dollar as a few foreign banks sold the greenback, likely for initial public offering-related foreign fund inflows, dealers said. The rupee had come under pressure and slumped against the greenback as sentiment was hit after the US struck Iranian nuclear facilities over the weekend.

"There seems to be some IPO-related flows, probably hitting in spot, so may be for Wednesday's IPO," a dealer with a foreign bank said. HDB Financial Services Ltd.'s IPO will open on Wednesday and close on Friday.

On Sunday, the US joined Israel and struck three Iranian nuclear facilities –- Fordo, Natanz, and Isafahan -- dropping 30,000-pound-bunker-buster bombs. In response, Tehran threatened to retaliate and close the Strait of Hormuz, which is an important chokepoint for nearly 20% of global crude oil supply. 

Oil marketing companies purchased dollars, anticipating a further rise in crude oil prices, which weighed on the rupee, dealers said. The Indian unit hit a low of 86.8550 a dollar earlier in the day. "The importers remained calm when the market opened, but some oil bidding probably came later as the tensions in West Asia still persists," a dealer at a private-sector bank said. 

A rise in crude oil prices exerts pressure on the import bill of India, as the commodity is a major import item. This weighs on the rupee. Dealers expect crude prices to hit $90 per barrel and above if Israel-Iran tension escalates. Crude oil prices could retreat to $70 per barrel levels if supply side worries ease, dealers said. 

At 1329 IST, the August Brent crude contract on the Intercontinental Exchange was at $77.32 per barrel, compared with $77.01 per barrel Friday and $78.85 per barrel Thursday. 

India's Petroleum and Natural Gas Minister Hardeep Singh Puri said India's supplies were stable, with oil imports coming through diversified routes. This likely calmed a few oil marketing companies, dealers said. "We have diversified our supplies in the past few years and a large volume of our supplies do not come through the Strait of Hormuz now," Puri wrote in a post on social media platform X. 

A few exporters also sold the greenback to take advantage of relatively high dollar/rupee levels, which supported the Indian currency, dealers said. They said despite the lucrative dollar/rupee levels, most exporters remained on the sidelines, expecting the rupee to fall more. 

For the rest of the day, the rupee is seen moving in a range of 86.60-86.90 against the dollar. Dealers peg key technical support for the rupee at 86.90 against the greenback.  (Gowri Lakshmi)

India Rupee: Technical levels for rupee - Jun 23

MUMBAI – At 1028 IST, the rupee was at 86.7475 per dollar. At 0900 IST, the rupee was at 86.7600 a dollar, against the previous close of 86.5850. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Sourabh Kumar and Gowri Lakshmi)

India Rupee - Asia FX: Most slip; oil prices, dlr index hit multi-week highs

MUMBAI – Most Asian currencies slumped against the US dollar Monday as sentiment took a hit after the US attacked nuclear facilities in Iran Sunday, dropping 30,000-pound-bunker-buster bombs on Iran's Fordow nuclear site. Investors awaited clarity and braced for Tehran's response to the attack. 

"Our scenario analysis shows that a $10 per barrel increase in crude oil prices would reduce Asia's current account positions by 0.2% to 0.9% of GDP.," MUFG said in a note. "Specifically, the trade balances of Thailand to be hit the worst, followed by Singapore and South Korea as they are the most sensitive to oil price increases."

Crude prices rallied in early trade and hit a five-month high of $81.39 per barrel after Iran's Supreme National Security Council said it would take a final decision on whether to close the Strait of Hormuz following the military attacks by US, Iranian media outlets reoported on Sunday. Around 20% of global oil and gas flows through the strait and Iran has strategically used the threat of closing it as a way to ward off Western pressure. 

"For now, parliament has come to the conclusion we should close the Strait of Hormuz, but the final decision in this regard is the responsibility of the Supreme National Security Council," Iranian media reported, quoting Esmail Kosari, a member of the Iran parliament's security commission. 

The South Korean won was the worst hit in early trade, slumping 0.9% against the greenback as the currency is sensitive towards global oil prices due to its high dependence on energy. Moreoever, South Korea relied on West Asia for almost 70% of its crude oil imports in 2024. Bank of Korea pledged Monday that it would take "appropriate market stabilization measures in a timely manner" due to rising global uncertainty and market volatility.

The dollar index rose to a near two-week high in early trade owing to likely safe-haven demand amid the ongoing uncertainties, dealers said. At 1004 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.04, broadly steady from its previous close of 98.77 and 98.78 Thursday. In early trade, the index rose to 99.16, the highest level since Jun. 11. 

The Philippine peso was down 0.8% and the Thai baht was down 0.7% against the greenback. Bank of Thailand is widely expected to hold rates steady at its monetary policy meeting on Wednesday amid ongoing trade uncertainty and domestic political turmoil. The Chinese yuan was down 0.1% against the greenback.

The Taiwan dollar and the Indonesian dollar were down 0.5% against the US currency. Indonesia's central bank said it would continue to intervene in the foreign exchange market to ensure the rupiah/dollar levels reflect its fundamentals, a bank offical said Monday as the Indonesian currency hit a one-month low against the greenback.

The Malaysian ringgit slipped 0.6% against the US dollar. Malaysia and the US have agreed to finalise trade negotiations ahead of the tariff implementation on Jul. 9, Malaysia's Ministry of Investment, Trade and Industry said Sunday. "Both Malaysia and the US representatives expressed their intent to finalize the negotiations before the expiry of the 90-day pause on tariff implementation and agreed to intensify efforts to reach an agreement that would be mutually acceptable by key stakeholders from both countries," the ministry said in a statement.  (Gowri Lakshmi)

India Rupee:Sharply dn on FPI outflows; mkts brace for Iran's response to US

MUMBAI – The rupee started the week sharply lower against the US dollar as banks purchased the greenback, likely on behalf of foreign portfolio investors, looking to withdraw funds from the Indian stock market, dealers said. Most market participants remain cautious as they await further clarity on Iran-Israel conflict and Iran's response to US attacks on Sunday. 

"The rupee was expected to open much lower, but I think markets have paused for the moment. They are in a wait-and-watch mode due to the ongoing tensions between Iran and Israel," a dealer at a state-owned bank said. 

Nevertheless, the rupee came under pressure as overseas investors withdrew funds from domestic financial markets and moved to safe-haven assets amid heightened geopolitical uncertainties in West Asia, dealers said. The Nifty 50 and the BSE Sensex were down 0.7% and 0.9% at 0915 IST. So far in June, FPIs have withdrawn funds worth $1.47 billion from the Indian markets. 

On Sunday, the US dropped 30,000-pound-bunker-buster bombs on Iran's Fordow nuclear site while Tel Aviv and Tehran continue to fire missiles at each other, wounding civilians. Iran's Supreme National Security Council said it would take a final decision on whether to close the Strait of Hormuz following the military attacks by US, after which crude oil prices rallied and briefly touched an over five-month high in early trade. 

However, dealers said that most oil marketing companies did not purchase the greenback aggressively as most of them had crude oil inventories for medium term and as the fluctuations in crude oil prices were already factored in. At 0927 IST, the August Brent crude contract on the Intercontinental Exchange was at $78.40 per barrel, compared with $77.01 per barrel Friday and $78.85 per barrel Thursday. 

The dollar index rose to a near two-week high in early trade owing to likely safe-haven demand amid the ongoing uncertainties, dealers said. At 0930 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.00, broadly steady from its previous close of 98.77 and 98.78 Thursday. In early trade, the index rose to 99.16, the highest level since Jun. 11. 

During the day, the rupee is seen moving in a range of 86.50-86.85 against the dollar. Dealers peg immediate technical support for the Indian unit at 86.80 against the greenback.  (Gowri Lakshmi)

India Rupee: Expected range for rupee - Jun 23

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)

End

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

Edited by Akul Nishant Akhoury

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