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Informist, Thursday, Jun. 26, 2025

By Gowri Lakshmi

MUMBAI – The rupee ended at a two-week closing high Thursday on persistent dollar sales by banks on behalf of foreign institutional investors, dealers said. The rupee climbed despite public-sector banks' purchasing the greenback, possibly on behalf of the Reserve Bank of India, which tried to prevent the rupee rising sharply, dealers said.

"RBI really tried to protect the 85.80 (a dollar) level, but couldn't really limit the rise as foreign funds flooded the market," a dealer at a private-sector bank said. The rupee appreciated 0.4% and ended at 85.7050 against the greenback, sharply higher from its previous close of 86.0850. The rupee moved in a range of over 30 paise during the day.

Most other Asian currencies also rose against the greenback as the dollar index slumped to an over-three-year low Wednesday. Other Asian currencies rose between 0.1% and 0.6%, with the Indonesian rupiah being the biggest gainer.

The rupee started the day on a positive note at 85.9200 against the greenback owing to foreign fund inflows into the initial public offerings of multiple domestic companies, dealers said. "It was the last day for a few IPOs (initial public offerings) and usually the last days of IPOs is when large fund flows come in," a dealer at a state-owned bank said. The public issues of Kalpataru Ltd., Globe Civil Projects Ltd., and Ellenbarrie Industrial Gases Ltd. opened Tuesday and closed Thursday. Dealers said over $750.00 million would have come to the market as initial public offering-related inflows.

The rupee was also lifted as the dollar index fell to an over-three-year low after reports said US President Donald Trump may replace US Federal Reserve Chair Jerome Powell, calling him "terrible". The tussle between Trump and Powell has been going on since Trump was re-elected in January and began publicly urging the central banker to cut the benchmark lending rates. Powell, on his part, has been stern about "cautiously" easing the monetary policy amid inflationary risks due to uncertainties arising from Trump's disruptive trade and tariff policies.

Reuters reported that the contenders for the post of Fed chair are former Fed governor Kevin Warsh, National Economic Council Director Kevin Hasset, current Fed Governor Christopher Waller, and US Treasury Secretary Scott Bessent.

Powell Wednesday said the Trump administration's tariff plans might cause a one-time jump in prices, but the risk they pose of more persistent inflation were significant enough for the Fed to be cautious about the timing and pace of its monetary policy easing cycle. Two days of Powell's testimony did not shift market expectations around Fed policy, with traders still anticipating two rate cuts this year. According to the CME FedWatch tool, traders see a 75.2% probability of the Fed holding rates at the July meeting of the US Federal Open Market Committee.

At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.14, slightly down from its previous close of 97.71 and from 97.97 Tuesday. Earlier, the index fell to 96.99, its lowest level since March 2022.

As the rupee inched towards 85.80, public-sector banks stepped in with dollar purchases, probably on behalf of the RBI, to prevent the rupee rising sharply as several stop-losses on long dollar bets had been placed at the 85.80-85.75 levels, dealers said. They said the RBI actively intervened in the market through dollar purchases throughout the day, first at 85.84 a dollar and later at multiple levels above 85.85.

Some dealers said that owing to continuous dollar inflows, stop-losses were triggered on long dollar bets at 85.80 and higher levels. The central bank is also likely to have purchased the greenback to add to its foreign exchange reserves, dealers said. However, the intervention was not aggressive, according to other dealers.

The rupee was further supported and lifted to the day's high of 85.6225 a dollar as foreign fund inflows into Indian equities continued throughout the day, dealers said. Both the benchmark stock indices, the Nifty 50 and the BSE Sensex, ended 1.2% higher. Banks' dollar sales for foreign fund flows into domestic corporations also supported the Indian unit, dealers said.

A few importers purchased dollars, noting the relatively lower dollar/rupee levels, capping a further rise in the rupee, dealers said. But most importers are waiting for the dollar/rupee to fall more before buying in large quantities, they said.

FORWARDS

The one-year exact-period dollar/rupee forward premium ended near a one-month high as a few banks purchased forward dollars for Indian corporations, dealers said. Some banks also purchased dollars for forward delivery to avail of the arbitrage opportunity between the onshore forward and offshore non-deliverable forward premium rates, dealers said. 

Dealers said some large corporations were buying forward dollars to meet their quarter-end fund requirements. A few dealers also said the RBI might have taken delivery of its buy/sell swaps, pushing forward premiums higher early Thursday. Increasing chances of a rate cut in the US some time soon also pushed dollar/rupee forward premiums higher, dealers said. 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 171.00 paise, against Wednesday's close of 170.73 paise. On an annualised basis, the premium was 1.99%, up from Wednesday's 1.97%.

OUTLOOK

Friday, the rupee will take cues from the movement of crude oil prices and the dollar index, dealers said. The rupee will also take cues from the movement of the offshore Chinese yuan, they said. However, it may come under some pressure as importers are likely to buy dollars to take advantage of the lower dollar/rupee levels, they added. Importers will also purchase dollars to meet their month-end payment obligations, dealers said.

During the day, the rupee is seen moving in a range of 85.40-86.20 against the greenback. Dealers see immediate technical resistance for the Indian currency at 85.40 a dollar.

India Rupee - World FX: Dlr index slumps after Trump seeks to replace Powell

MUMBAI – The dollar index slumped to an over three-year low Thursday as market participants mulled over US President Donald Trump's comments about Federal Reserve chief Jerome Powell. Trump Wednesday again criticised Powell, calling him "terrible", and said he had shortlisted a few potential candidates for the top post at the US Federal Reserve, according to media reports.

"I know within three or four people who I'm going to pick," Trump told reporters when asked if he was interviewing candidates to replace Powell. Reuters reported that the contenders for the post were former Fed Governor Kevin Warsh, National Economic Council Director Kevin Hasset, current Fed Governor Christopher Waller, and US Treasury Secretary Scott Bessent.

At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.14, lower than 97.71 Wednesday and 97.97 Tuesday. The index fell to its lowest level of 96.99 since March 2022.

Meanwhile, Powell Wednesday said the Trump administration's tariff plans might just cause a one-time jump in prices but the risk they posed on more persistent inflation were significant enough for the US Fed to be cautious about the timing and pace of its monetary policy easing cycle.

"If it comes in quickly and it is over and done then yes, very likely it is a one-time thing," Powell told a US Senate panel. "As the people who are supposed to keep stable prices, we need to manage that risk. That's all we're doing, through holding rates steady for now."

The euro was up 0.5% against the dollar. However, its gains were capped as a survey by market research institute GfK and the Nuremberg Institute for Market Decisions showed Germany's consumer sentiment for July is expected to fall to -20.3 points from a revised -20.0 points in June.

The Australian dollar and the New Zealand dollar rose 0.3% and 0.4%, respectively, against the greenback after China's Premier Li Qiang Wednesday reiterated his positive economic outlook. Li showed confidence that China can turn consumption as a driving force for economic growth while also showcasing the country as a stabilising force in a fast-changing global trade landscape. Any change in the Chinese economy directly impacts the currencies of Australia and New Zealand due to their close bilateral relations with China.

The Japanese yen surged 0.9% against the greenback. The Swiss franc and the pound sterling rose 0.6% each against the dollar. The Canadian dollar rose 0.3%.  (Gowri Lakhmi)

India Rupee: Surges on persistent FII flows into equities, over 3-yr low dlr

MUMBAI – The rupee surged against the dollar after opening higher as banks persistently sold the greenback for foreign fund inflows into Indian equities, dealers said. The dollar index fell more in European trade, which further lifted the rupee higher, dealers said. 

A few dealers also cited some overseas flows, specifically into some Indian companies, which supported the rupee, dealers said. Due to such inflows, the rupee hit a two-week high of 85.6200 a dollar. "There are persistent FIIs into equities, including IPOs, and some custodian flows as well," a dealer with a foreign bank said. Both the Nifty 50 and BSE Sensex were 1.1% higher at 1401 IST. 

Some foreign fund inflows were also for the currently open initial public offerings, deales said. The public issue of HDB Financial Services Ltd. opened Wednesday and will close Friday. Issues of Kalpataru Ltd., Globe Civil Projects Ltd., Ellenbarrie Industrial Gases Ltd. opened Tuesday and will close Thursday.

The dollar index fell to an over three-year low in early European trade Thursday. The index, which measures the strength in the greenback against a basket of six major currencies, fell to 97.08, the lowest since Mar. 1, 2022. The index was 97.09 at 1405 ISt, down from 97.71 Wednesday and 97.97 Tuesday. The dollar fell after US President Donald Trump again criticised US Federal Reserve Chair Jerome Powell, calling him "terrible". Trump said he had shortlisted a few potential candidates for the top post at the US Federal Reserve, according to media reports. 

Some banks purchased dollars, likely for the Reserve Bank of India, which capped gains of the rupee, dealers said. However, the intervention was not aggressive, dealers said. A few importers also purchased dollars, noting relatively lower dollar/rupee levels. But most of them waited for the dollar/rupee to fall more, before buying in large quantums, dealers said. 

During the day, the rupee is seen moving in a range of 85.60-86.90 against the greenback. Dealers have pegged immediate technical resistance for the Indian unit at 85.60 a dollar.  (Sourabh Kumar)

India Rupee: Premium hits 1-mo high as banks buy fwd dollars for corporates

MUMBAI – The one-year exact-period dollar/rupee forward premium hit a near one-month high Thursday as a few banks purchased forward dollars for Indian corporates, dealers said. Some banks also purchased dollars for forward delivery to avail of the arbitrage opportunity between the onshore forward and offshore non-deliverable forward premium rates, dealers said. 

"Some foreign banks were paying for a few large corporates, but then the levels were good, so receiving came in," a dealer with a state-owned bank said. Dealers said some large corporates were purchasing forward dollars to meet their quarter-end fund requirements. A few dealers also said the Reserve Bank of India might have taken delivery of its buy/sell swaps, pushing forward premiums higher early Thursday.

The one-year exact-period dollar/rupee forward premium hit 2.02% on an annualised basis, the highest since May 28. The premium was 1.98% at 1357 IST, up from 1.97% Wednesday and 1.88% Tuesday. On an absolute basis, the premium was 170.00 paise, little changed from 170.73 paise Wednesday, but higher than 161.53 paise Tuesday. 

Increasing chances of a rate cut in the US sometime soon also pushed dollar/rupee forward premiums higher, dealers said. The odds of a 25-basis point rate cut by the US Federal Open Market Committee in July increased to 24.8% from 18.6% Tuesday, as per CME FedWatch tool. Further, there are 69% chances of a quarter percentage point rate cut in September. The chances of a 50 bps rate cut in September increased to 21.8% Thursday from 15.2% Tuesday.

A fall in the benchmark 10-year US Treasury yield also pushed forward premiums higher, dealers said. The yield on the 10-year US Treasury note fell to 4.28% in early European trade from Wednesday's close of 4.29%. The US Treasury yield fell on rising bets of US rate cut. Should the Fed cut rates, the interest rate differential between the US and India would rise, pushing forward premiums higher, dealers said. Forwards of a currency pair are reflective of the interest rate differential between the two countries. The rise in forward premiums was limited as some exporters sold forward dollar, noting lucrative levels, dealers said.  (Sourabh Kumar)

India Rupee - Asia FX: Most rise after dollar index slumps to over-3-yr low

MUMBAI – Most Asian currencies rose Thursday after the dollar index slumped to an over-three-year low post reports that US President Donald Trump has said he has shortlisted a few potential candidates for the top post at the US Federal Reserve, according to media reports. 

"I know within three or four people who I'm going to pick," Trump told reporters when asked if he was interviewing candidates to replace Powell, according to reports. Reuters reported that the contenders for the post of US Fed chair were former Fed Governor Kevin Warsh, National Economic Council Director Kevin Hasset, current Fed Governor Christopher Waller, and US Treasury Secretary Scott Bessent. 

Meanwhile, Powell Wednesday said that the Trump administration's tariff plans might just cause a one-time jump in prices but the risk they posed on more persistent inflation were significant enough for the US Fed to be cautious about the timing and pace of its monetary policy easing cycle. "If it comes in quickly and it is over and done then yes, very likely it is a one-time thing," Powell told a US Senate panel. "As the people who are supposed to keep stable prices, we need to manage that risk. That's all we're doing, through holding rates steady for now."

At 1015 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.47, a tad lower than its previous close of 97.71 and down from 97.97 Tuesday. The index fell to 97.27, its lowest level since March 2022. The Indonesian rupiah rose 0.4% and the Malaysian ringgit 0.3%.

The offshore Chinese yuan rose 0.1% against the greenback after China's Premier Li Qiang made positive economic outlook Wednesday. Li showed confidence that China can turn consumption as a driving force for economic growth while also showcasing the country as a stabilising force in a fast-changing global trade landscape. "Policymakers were growing the nation into a mega-sized consumer powerhouse on top of its solid foundation as a manufacturing power," he said. "This will bring vast markets to enterprises from all countries."

The Thai baht was up 0.3% against the greenback. Bank of Thailand Wednesday held its benchmark lending rates steady at 1.75%, as widely expected, inorder save some policy ammunition if needed to support the sluggish economy which is expected to slow down amid trade uncertainty and resurging domestic political turmoil. "The Thai economy is projected to slow down going forward, as a result of increasing risks to merchandise exports stemming from U.S. trade policies as well as geopolitics and domestic factors," the central bank siad in a statement. 

The South Korean won rose 0.3% against the US currency. South Korean President Lee Jae Myung urged the Parliament so swiftly approve the $14.7 billion of extra government spending as the economy is in "desperate" situation across domestic consumption and exports. 

The Philippines was up 0.1% and the Taiwan rose 0.5% against the greenback.  (Gowri Lakshmi)

India Rupee: Rises on FX inflows, but likely RBI dollar purchases cap gains

MUMBAI – The rupee rose in early trade against the dollar due to foreign fund inflows, but the gains were capped as the Reserve Bank of India is likely to have purchased the greenback, dealers said. Some importers also purchased dollars, noting lucrative dollar/rupee rates, which limited the upward movement of the Indian currency, dealers said. 

"Yes, the central bank is there around 85 (85.85 a dollar), because I think if it moves higher, 75 (85.75 a dollar) is a crucial level, where we might see some stop-losses getting hit," a dealer with a state-owned bank said. The central bank is likely to have purchased the greenback to add to its foreign exchange reserves, as per a few dealers. However, the intervention was not aggressive, the dealers said. Others said if the rupee sustains above 85.80 a dollar, multiple stop-losses could be triggered on long dollar bets, leading to a sharp rise of the rupee to 85.50 a dollar.

The rupee opened higher against the dollar Thursday, and retained its upward momentum, driven by some foreign fund inflows, dealers said. Some banks sold dollars on behalf of their overseas clients who wanted to invest in domestic equities, dealers said. The foreign fund inflows were also related to the initial public offerings currently open. The public issue of HDB Financial Services Ltd. opened Wednesday and will close Friday. Issues of Kalpataru Ltd., Globe Civil Projects Ltd., Ellenbarrie Industrial Gases Ltd. opened Tuesday and will close Thursday.

The dollar index fell to an an over three-year low Thursday, which supported the rupee, dealers said. The US currency weakened after US President Donald Trump again criticised US Federal Reserve chair Jerome Powell, calling him "terrible". Trump said he had shortlisted a few potential candidates for the top post at the US Federal Reserve, according to media reports. 

The dollar index, which measures the strength of the greenback against a basket of six major currencies, was 97.48 at 1010 IST, down from 97.71 Wednesday and 97.97 Tuesday. It fell to an over three-year low of 97.27 earlier Thursday. During the day, the rupee is seen moving in a range of 85.75-86.00 against the greenback. Dealers peg immediate technical resistance for the Indian unit at 85.75 a dollar.  (Sourabh Kumar)

India Rupee: Sharply up on FX inflows, fall in dollar index to 3-year low

MUMBAI – The rupee rose sharply against the dollar Thursday owing to fund flows into the initial public offerings of multiple domestic companies, dealers said. A fall in the dollar index to a multi-year low also supported the rupee, they said. "The market is mostly moved by inflows, fall in dollar index also a factor," a dealer at a private sector bank said. 

Dealers said that since it was the last day of subscription to a few IPOs, the flows would be larger compared to Wednesday, and this could support the rupee. The public issues of Kalpataru Ltd., Globe Civil Projects Ltd., Ellenbarrie Industrial Gases Ltd. opened Tuesday and will close Thursday. The benchmark indices, the Nifty 50 and the BSE Sensex were up 0.3% at pre-open. 

The rupee was also supported by a slump in the dollar index, dealers said. The index fell to an over three-year low Wednesday as market participants assess US President Trump's latest comments on the US central bank and its chief. Trump reiterated his strong criticism of Fed Chair Jerome Powell, called him "terrible", and said he had shortlisted a few potential candidates for the top post at the US Federal Reserve, according to media reports. 

At 0927 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.42, a tad lower than its previous close of 97.71 and down from 97.97 Tuesday. The index fell to 97.27, its lowest level since March 2022. 

Dealers said most importers remained on the sidelines in early trade, hoping for further rise of the rupee. "85.80 (a dollar) is the level where importers will come, they are waiting for that. It went around that level yesterday (Wednesday), so we can see it happening today," a currency trader at a brokerage firm said. 

During the day, the rupee is seen moving in a range of 85.75-86.20 against the greenback. Dealers peg immediate technical resistance for the Indian unit at 85.75 a dollar.  (Gowri Lakshmi)

India Rupee: Expected range for rupee - Jun 26

MUMBAI – Following are the expected support and resistance levels for the rupee on Thursday, 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 Rajeev Pai

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