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Informist, Tuesday, Jul. 1, 2025

By Gowri Lakshmi

MUMBAI – The rupee ended sharply higher against the dollar Tuesday as some foreign banks sold the greenback, likely for foreign fund inflows, dealers said. A decline of the dollar index to hit a fresh three-year low also supported the Indian unit, they said. However, dollar purchases by a few importers prevented a further rise in the rupee, dealers said. 

"The rupee was trading rangebound throughout the day. There seems to have been a good balance between buyers and sellers," a dealer at a foreign bank said. "While nats (nationalised banks) bid for oilers, some foreign banks sold for FX inflows." 

After trading in a range of 20 paisa during the day, the rupee settled at 85.5200 against the greenback, sharply up from its previous close of 85.7550. The volume in the currency market was lower-than-usual as market participants awaited the US jobs data due later in the day. The Indian unit was also one of the best-performing currencies amongst its regional peers and rose 0.3% against the US unit.

Most other Asian currencies also rose against the US dollar owing to the sustained weakness in the dollar index. Other Asian currencies rose between 0.1-0.3%, with the Malaysian ringgit logging the biggest gains.

The rupee started the day higher against the dollar at 85.6100 as the dollar index hit a fresh three-year low on rising worries over the mounting US fiscal deficit. The US Senate Republicans on Monday tried to pass Trump's spending bill, which is expected to add another $3.3 trillion to the US national debt. 

This caught investors off guard as market participants are already weighing the uncertainty about US trade policies and their impact on the economy. Investors also weighed the likelihood of an early rate cut by the US Federal Reserve after the recent set of weaker-than-expected economic data from the US. 

At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 96.74, little changed from 96.79 Monday and 97.25 Friday. The index fell to 96.38 in early trade, its lowest level since Feb. 24, 2022. 

"The rupee is now waiting for fresh cues. Right now, the movements are really range-bound. Maybe after today's jobs data, we may get a clearer idea where the dollar is headed and how the rupee will perform," a currency trader at a brokerage firm said. 

The rupee was also supported as traders trimmed their long dollar bets owing to the sustained weakness of the dollar index, dealers said. The rupee was also supported as some foreign banks sold the greenback, on behalf of overseas investors, looking to invest in domestic financial markets, dealers said. On Tuesday, both the benchmark indices, the Nifty 50 and the BSE Sensex, ended in the green. 

However, the rise in the rupee was limited as a few public-sector banks purchased the greenback, on behalf of oil marketing companies, who wanted to take advantage of the relatively lower crude oil prices, dealers said. Some importers also bought the greenback to take advantage of the lucrative dollar/rupee levels, dealers said.

Crude oil prices edged slightly lower as investor sentiment improved due to easing geopolitical tensions in West Asia and anticipation of an output hike in August by the Organization of Petroleum Exporting Countries and its allies. At 1530 IST, the August Brent Crude contract on the Intercontinental Exchange was at $67.40 per barrel, marginally lower from $67.61 per barrel Monday and $67.77 per barrel Friday.

FORWARDS

The one-year dollar/rupee forward premium ended tad higher Tuesday ahead of the US Job Openings and Labor Turnover Survey, due later in the day, dealers said. The volume in the forwards market was dull as participants awaited fresh cues, dealers said.  

Earlier in the day, the one-year dollar/rupee forward premium was supported as some banks purchased dollars for forward delivery, taking advantage of the arbitrage opportunity between onshore forward and offshore non-deliverable forward premiums, dealers said.

The one-year exact period dollar/rupee forward premium was 1.99% at 1530 IST, tad up from 1.97% Monday and 1.96% Friday. On an absolute basis, the premium was 169.84 paise, little changed from 168.55 paise Monday and 168.02 paise Friday.

OUTLOOK

On Wednesday, 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. The rupee will be supported by likely foreign fund inflows into Indian financial markets, dealers said.

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 85.30-85.90 against the greenback. Dealers see immediate technical resistance for the Indian currency at 85.40 a dollar.

India Rupee - World FX: Yen up 0.7% vs dlr; focus on speech by BoJ's Ueda

MUMBAI – The Japanese yen surged 0.7% against the US dollar Tuesday after Japan's manufacturing sector expanded in June for the first time in thirteen months. The final au Jibun Bank Japan manufacturing purchasing managers' index rose to 50.1 in June from 49.4 in May. A reading above 50 indicates expansion while that below 50 indicates contraction. Market participants now await speech by Bank of Japan Governor Kazuo Ueda due later in the day, for more insights into the BoJ's rate outlook.

The dollar index fell to a fresh three-year low early Tuesday as investors weighed on US President Donald Trump's impending tax bill. The US Senate Republicans Monday tried to pass Trump's spending bill, which will lead to a $3.3-trillion hit to the US national debt. Trump is pushing lawmakers to get the bill passed before the Independence Day holiday on Jul. 4. "President Trump is committed to keeping his promises, and failure to pass this bill would be the ultimate betrayal," the White House said in a statement Saturday.

This heightened worries about a ballooning US fiscal deficit amid uncertainty around the US trade policy. Investors also weighed in on the likelihood of an early rate cut by the US Federal Reserve in view of the recent weaker-than-expected economic data.

At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 96.45, broadly steady from 96.79 Monday and 97.25 Friday. The index fell to 96.38, its lowest level since Feb. 24, 2022. Market participants now await the US Job Openings and Labour Turnover Survey and ISM Purchasing Managers' Index for June, both due later in the day.

The US jobs data for June is expected to show an addition of 110,000 new jobs, down from 135,000 jobs in May, according to media reports. Unemployment is forecast to edge higher to 4.3% in June from 4.2% the previous month. Wage growth is projected to remain unchanged at 3.9% on year.

The euro was up 0.3% against the greenback owing to the weakness in the dollar index. European Central Bank President Christine Lagarde Monday said global uncertainty is likely making inflation more volatile and requiring the central bank to act more forcefully to keep prices within the target. The European Central Bank said Monday that with an updated strategy, major deviations from its target range in either direction would require "forceful or persistent" policy action to ensure price growth comes down to 2%.

The pound sterling was up 0.3% against the greenback. The S&P Global UK manufacturing PMI rose to 47.7 in June from 46.6 the earlier month. Investors now eye speech by Bank of England Governor Andrew Bailey later in the day. 

The Australian dollar rose 0.1% against the greenback. Its gains were capped after Australia's manufacturing PMI fell to 50.6 in June from 51.0 in May, the lowest reading since February. The New Zealand dollar was up 0.4% against the US currency after the Caixin China General manufacturing PMI rose unexpectedly to 50.4 in June from 48.3 in May, beating the market forecast of 49.0. Any change in the Chinese economy directly impacts the currency of New Zealand due to their close bilateral trade relations.

The Canadian dollar rose 0.1% and the Swiss franc rose 0.6% against the greenback.  (Gowri Lakshmi)

India Rupee: Remains up on weak dollar index; volume lower than usual

MUMBAI – The rupee remained higher against the dollar Tuesday after the dollar index fell to a fresh multi-year low earlier in the day, dealers said. The rupee was also supported as a few foreign banks sold the greenback, likely on behalf of some Indian corporates, dealers said. The volume in the currency remains lower than usual as market participants await more economic data from the US, dealers said. 

"Market is very quiet today, it is waiting for some fresh cues, everything else is factored in," a currency trader at a brokerage firm said. "NFP (non-farms payrolls) and FOMC (Federal Open Market Committee meeting) toward month-end is eyed." The rupee has moved in a relatively narrow range of just 10 paise so far. 

The rupee rose as the dollar index slipped to an over-three-year low in early trade as investor sentiment was hit after US President Donlad Trump's impending tax bill takes focus. At 1253 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 96.71, broadly steady from 96.79 Monday and 97.25 Friday. The index fell to 96.61 in early trade, its lowest level since Feb. 28, 2022. 

However, the rise of the rupee was limited as a few public-sector banks purchased the greenback, on behalf of oil marketing companies, who wanted to take advantage of the relatively lower crude oil prices, dealers said. Crude oil prices edged slightly lower as investor sentiment improved due to easing geopolitical tensions in West Asia and anticipation of an output hike in August by the Organization of Petroleum Exporting Countries and its allies.

At 1251 IST, the August Brent Crude contract on the Intercontinental Exchange was at $66.81 per barrel, slightly lower than $67.61 per barrel Monday and $67.77 per barrel Friday.

For the rest of the day, the rupee is seen moving in a range of 85.30 and 85.70 against the greenback. Dealers peg immediate resistance for the rupee at 85.40 a dollar.  (Gowri Lakshmi)

India Rupee - Asia FX:Most up; dlr index at 3-yr low on fiscal deficit fears

MUMBAI – Most Asian currencies traded higher against the US dollar Tuesday as the dollar index hit a multi-year low owing to rising worries about a ballooning fiscal deficit in the US. On Monday, US Senate Republicans tried to pass Trump's spending bill, which will deal a $3.3-trillion hit to the US national debt. Investors also weighed the likelihood of an early rate cut by the US Federal Reserve after the recent set of weaker than expected economic data from the US. 

At 1033 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 96.75, unchanged from Monday and 97.25 Friday. The index fell to 96.61 in early trade, its lowest level since Feb. 28, 2022. The Taiwan dollar was up 0.1% and the South Korean won traded flat. 

The Philippines peso rose 0.1% against the greenback while the Malaysian ringgit gained the most in early trade and was up 0.5% against the US currency. The Thai baht fell 0.1% against the greenback. 

The Indonesian rupiah was up 0.3% against the US unit as Indonesia's annual inflation rose to 1.87% in June from 1.6% in May, slightly above market expectations of a 1.83% rise. The inflation rate continues to be within Indonesia's central bank's target range of 1.5-3.5%. However, core inflation fell to a five-month low of 2.37%. 

The Chinese yuan traded flat. The Caixin China General manufacturing purchasing managers' index rose unexpectedly to 50.4 in June from 48.3 in May, beating the market forecast of 49.0.  (Gowri Lakshmi)

India Rupee: Technical levels for rupee - Jul 1

MUMBAI – At 1044 IST, the rupee was at 85.5925 per dollar. At 0900 IST, the rupee was at 85.6100 a dollar, against the previous close of 85.7550. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Gowri Lakshmi)

India Rupee: Rises as dlr index hits 3-yr low on Trump's impending tax bill

MUMBAI – The rupee rose against the dollar Tuesday as the dollar index hit a fresh three-year low due to rising worries over the US' fiscal defcit ballooning because of US President Donald Trump's impending tax bill, dealers said. "The slide in dxy (dollar index) has triggered a risk, and has probably made some corporates sell (dollars) in the morning," a dealr at a private sector bank said. 

The rupee was supported as the dollar index fell after US Senate Republicans on Monday tried to pass Trump's spending bill, which will deal a $3.3-trillion hit to the US national debt. This triggered risk-off sentiment among investors as uncertainties around US trade policies and the US economy persist. Investors also weighed the likelihood of an early rate cut by the US Federal Reserve after the recent set of weaker than expected economic data from the US. 

At 0940 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 96.74, little changed from 96.79 Monday and 97.25 Friday. The index fell to 96.61 in early trade, its lowest level since Feb. 28, 2022. Dealers said that owing to sustained weakness of the US dollar, traders trimmed their long dollar bets, which boosted the Indian currency. 

Some dealers speculated that the rupee was also supported by likely foreign fund inflows into Indian financial markets. At 0943 IST, the benchmark stock indices, the Nifty 50 and the BSE Sensex, were both up 0.3%. 

Dealers said most importers refrained from placing any large bets and remained on the sidelines, anticipating a further rise of the rupee. "Right now, everyone is in a wait-and-watch mode because of the trade deal," a currency trader at a brokerage firm said. "The rupee seems to be moving at its technical levels and will likely be range-bound." 

During the day, the rupee is seen moving in a range of 85.40 and 85.80 a dollar. Dealers peg immediate resistance for the rupee at 85.40 against the greenback.  (Gowri Lakshmi)

India Rupee: Expected range for rupee - Jul 1

MUMBAI – Following are the expected support and resistance levels for the rupee on Tuesday, 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 Saji George Titus

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