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Informist, Monday, Jun. 30, 2025

By Gowri Lakshmi 

MUMBAI – The rupee ended sharply lower against the dollar Monday as banks persistently bought the greenback on behalf of importers and foreign portfolio investors, dealers said. However, a fall in the dollar index prevented a further fall in the rupee, they said. "Buying (of dollars) came from oilers and importers. Some also purchased dollars for likely front-running ahead of the listing of HDB Financial (Services)," a currency trader at a brokerage firm said.

After moving in a range of 33 paise during the day, the Indian unit settled at 85.7550 against the dollar, sharply down from its previous close of 85.4750. Most other Asian currencies rose against the dollar owing to its sustained weakness. The other Asian currencies rose 0.1-0.5% against the greenback, with the Malaysian ringgit being the biggest gainer. The dollar index fell to a fresh three-year low during European market hours as market participants brace for the US tariffs Jul. 9.

The rupee started the day steady against the dollar at 85.4725 as importers' demand for dollars was offset by the weak dollar index, dealers said. The dollar index continued to struggle to gain traction even as optimism around trade deals with the US improved investor sentiment, they said. Friday, the US and China had confirmed details of a trade agreement that seeks to allow exports of rare earth minerals and easing of technology restrictions.

The dollar was also not supported by a rise in US inflation for May as uncertainties around the US Federal Reserve's rate outlook persist even as expectations of a rate cut as early as September rise. Data published Friday showed that the US Personal Consumption Expenditures Price Index, the Fed's preferred inflation gauge, rose marginally in May, bringing annual inflation to 2.3%. The core Personal Consumption Expenditures Price Index rose to 2.7% on year. The Fed's inflation target is 2%, a level not seen in over four years now.

At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.23, unchanged from Friday and steady compared to 97.35 Thursday. The index fell to 96.97 earlier in the day, its lowest level since March 2022. 

The rupee came under pressure and hit the day's low as banks purchased the greenback on behalf of importers and foreign portfolio investors, dealers said. Importers purchased the greenback to meet their month-end payment obligations, dealers said. Banks also purchased the greenback ahead of their daily reference-rate fixing window, which put the rupee under further pressure, dealers said. 

They said a few importers anticipated the rupee rising further, but as the currency came under pressure, other importers purchased dollars to take advantage of the relatively lower dollar/rupee levels. Dealers also said dollar demand in the cash market was higher than usual owing to month-end payment-related purchases. "This is a month-end phenomenon, it is also the quarter-end (and) dollar demand is at its peak now," a dealer at a private-sector bank said.

Some banks also purchased the dollar on behalf of overseas investors, looking to withdraw funds from the domestic stock market, dealers said. Both the benchmark indices, the Nifty 50 and the BSE Sensex, ended 0.5% lower Monday. Month-end dollar demand by importers and foreign fund outflows brought the rupee to the day's low of 85.77 a dollar. 

FORWARDS

The one-year dollar/rupee forward premium ended steady  as market participants are waiting for more US economic data to assess the interest rate trajectory, dealers said. However, the dollar/rupee cash-tom swap rate surged on the rising rupee requirement of banks at the end of the quarter at a time when there is already a large dollar surplus, dealers said. The dollar/rupee cash-tom swap rate rose to a high of 2.70 paise, or 15.93% on an annualised basis. This is the highest level since Mar. 28.

At 1530 IST, the one-year exact-period dollar/rupee forward premium was 168.55 paise, little changed from Friday's close of 168.02 paise. On an annualised basis, the premium ended at 1.97%, unchanged from Friday. Market participants are now waiting for the US jobs report for May, due Tuesday. 

OUTLOOK

Tuesday, 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. They also said most market players are in a "wait-and-watch" mode for details on trade deals with the US and for any tariff-related statements by President Donald Trump.

The rupee may come under some pressure as importers are likely to buy dollars to take advantage of the lower dollar/rupee levels, they added. Overseas investors, looking to exit the Indian financial markets, may also purchase dollars, which may weigh on the rupee, dealers said.

During the day, the rupee is seen moving in a range of 85.50-86.00 against the greenback. Dealers see immediate technical support for the Indian currency at 85.90 a dollar

India Rupee - World FX: Dlr hits 3-year low; mkts brace for US tariff deadline

MUMBAI – The dollar index hit a fresh three-year low Monday as market participants braced for the Jul. 9 tariff deadline of the US. Data published Friday showed that the Personal Consumption Expenditures price index, the US Federal Reserve's preferred gauge of inflation, rose marginally by 0.1% on month in May, bringing the annual inflation rate to 2.3%. The reading came in line with analysts' estimates in a Dow Jones poll. The core personal consumption expenditure rose 2.7% on year. The Fed's inflation target is 2%, a level not seen in over four years. 

At 1511 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.16, broadly steady from 97.25 Friday and 97.35 Thursday. The index fell to 96.97, its lowest level since March 2022. The Swiss franc was up 0.3%.

The euro rose 0.1% against the greenback. The euro came under pressure after Germany's retail sales unexpectedly fell 1.6% on month in May, against analyst forecast of 0.5% rise, dampening hopes of a strong economic growth for Apr-Jun in Eurozone's largest economy. In April, retail sales declined 0.6%.

The Japanese yen was up 0.3% against the US currency as Japan's factory output rose. However, gains in the currency were limited as manufacturing activities rose at a slower-than-expeced pace in May as the aggressive US tariffs threatened the already sluggish economic recovery. Industrial output in Japan rose 0.5% in May, significantly lower than the median forecast for 3.5% in a Reuters poll. 

The pound sterling was down 0.2% against the greenback. Data published earlier in the day showed that UK's economy grew at its fastest pace in a year in Jan-Mar. UK's GDP rose 0.7% in the March quarter, in line with the preliminary estimates. 

The Australian dollar and the New Zealand dollar rose 0.1% each against the greenback on rising optimism around US-China trade deal. On Friday, the US and China confirmed details of a trade agreement that sought to allow exports of rare earth minerals and easing of tech restrictions, a statement by China's commerce ministry said. Any change in the Chinese economy directly impacts the currencies of New Zealand and Australia due to their close bilateral trade relations. 

The Canadian dollar was up 0.1% against the dollar as the US and Canada are set to resume their trade talks. Ottawa said Sunday it has revoked its digital services tax as a step to seek mutually beneficial comprehensive trade arrangement with the US. The move comes after US President Donald Trump announced over the weekend that he will "be terminating ALL discussions on Trade with Canada" in response to Ottawa's decision to impose digital services tax on US tech firms. 

"Today's announcement will support a resumption of negotiations toward the July 21, 2025, timeline set out at this month's G7 Leaders' Summit in Kananaskis," Canadian Prime Minsiter Mark Carney said in a statement.  (Gowri Lakshmi)

India Rupee: Tad down as importers buy dollars; weak dlr index limits fall

MUMBAI – The rupee was down against the dollar Monday as banks purchased the greenback on behalf of importers, dealers said. Some banks also bought dollars during the reference-rate fixing window, dealers said. However, the fall of the rupee was limited as the dollar index hit a fresh three-year low, they said.

"There was some (reference-rate fixing) fix-related buying happening, that's why momentarily the rupee went down, but the dollar index also fell simultaneously, bringing the rupee back," a dealer at a private sector bank said. The rupee fell to an intraday low of 85.5575 against the greenback.

The dollar index fell to a fresh three-year low of 96.97 as market participants await further details on the trade deals of various countries with the US ahead of the Jul. 9 tariff deadline. Investor sentiment improved after the US and China Friday confirmed details of a trade agreement that would now allow exports of rare earth minerals and easing of technology restrictions, a statement by China's commerce ministry said. China will review and approve export applications for goods subject to restrictions while the US will cancel a range of existing barriers imposed on Beijing.

At 1313 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.13, broadly steady from 97.25 Friday and 97.35 Thursday.

Dealers said most market players are in a "wait and watch" mode for details on trade deals with the US and for any tariff-related statements by US President Donald Trump. Dealers also said that dollar demand in cash market was higher than usual owing to month-end payment related purchases.

For the rest of the day, the rupee is seen moving in a range of 85.30 and 85.60 against the dollar. Dealers peg immediate resistance for the Indian unit at 85.60 against the greenback.  (Gowri Lakshmi)

India Rupee - Asia FX: Mixed; Chinese yuan rise on US-China trade deal hopes

MUMBAI – Asian currencies traded mixed Monday as investors braced for trade deals with the US. The dollar index remained weak and barely moved as market participants awaited further details of ongoing trade negotiations of various countries with the US. On Friday, the Personal Consumption Expenditures price index, the US Federal Reserve's preferred gauge of inflation, rose marginally by 0.1% on month in May, bringing the annual inflation to 2.3%. The reading came in line with analysts' estimates in a Dow Jones poll. The core personal consumption expenditure rose 2.7% on year. The Fed's inflation target is 2%, a level not seen in over four years. 

At 1021 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies was at 97.16, broadly steady from 97.25 Friday and 97.35 Thursday. The index fell to 96.99 on Thursday, its lowest level since March 2022. The Malaysian ringgit was up 0.4% and the Indonesian rupiah was down 0.2%. 

Investor sentiment across the globe improved after the US and China confirmed details of a trade agreement that sought to allow exports of rare earth minerals and easing of tech restrictions, a statement by China's commerce ministry said. China will review and approve export applications for goods subject to export under rules while the US will cancel a range of existing barriers imposed on Beijing. The offshore Chinese yuan was up 0.1% against the greenback.

Further, data published earlier in the day showed that China's factory activities continue to contract for the third consecutive month in June in the wake of a fragile and uncertain trade agreement with the US. The purchasing managers' index rose to 49.7 in June from 49.5 in May. A PMI reading below 50 indicates contraction in the sector. 

The Thai baht was up 0.2% against the US dollar. Thai Finance Minister Pichai Chunhavajira said the US has agreed to hold talks with Bangkok this week and plans to travel to the US, heading the Thai trade negotiation team. "The Thai government is ready to face any approaches the US may take, which is why it is crucial to have parallel collaboration between the Fiscal Policy Office and the Department of Trade Negotiations to ensure that the negotiations cover all levels and do not put Thailand at a disadvantage," Chunhavajira said. 

The Philippine peso was up 0.4% against the dollar. Data published earlier in the day showed that the Philippine central bank is estimating the country's current account deficit to narrow to 3.3% of GDP this year and to 2.5% next year, from 3.9% as forecasted earlier for both years. 

The Taiwan dollar was down 0.4% against the greenback. The South Korean won rose 0.7% against the US currency. However, gains in the currency were limited as South Korea's industrial production fell 2.9% on month in May for the second consecutive month and significantly missed the market expectations of 0.1% fall.  (Gowri Lakshmi)

India Rupee: Steady as weak dollar index offsets importers' dollar buys

MUMBAI – The rupee was steady against the dollar Monday as banks' dollar purchases for importers offset weakness in the dollar index, dealers said. Importers purchased the greenback to meet their month-end payment obligations, dealers said. "Market is quiet, some month-end and quarter-end demand from importers is there," a dealer at a private sector bank said.

Dealers said improving investor sentiment about trade deals ahead of the US tariff deadline also supported the rupee. The US and China had confirmed details of a trade agreement that seeks to allow exports of rare earth minerals and easing of tech restrictions, a statement by China's ministry said. China will review and approve export applications for goods subject to export under rules, while the US will cancel a range of existing barriers imposed on Beijing.

The dollar index struggled to gain traction even as optimism around trade deals improves, dealers said. The US personal consumption expenditures price index, the US Federal Reserve's preferred gauge of inflation, rose marginally by 0.1% in May, bringing annual inflation to 2.3%. The core personal consumption expenditure rose to 2.7% on year. The Fed's inflation target is 2%, a level not seen in over four years. 

At 0919 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.25, unchanged from Friday and steady compared to 97.35 Thursday. The index fell to 96.99 on Thursday, its lowest level since March 2022.

During the day, the rupee is seen moving in a range of 85.35 to 85.80 against the dollar. Dealers peg immediate resistance for the Indian unit at 85.35 a dollar.  (Gowri Lakshmi)

India Rupee: Expected range for rupee - Jun 30

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 Rajeev Pai

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