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Informist, Wednesday, Jul. 2, 2025

By Gowri Lakshmi

MUMBAI – The rupee ended sharply lower against the dollar as importers and foreign portfolio investors purchased the greenback, dealers said. Volumes in the currency market remained lower-than-usual as most market participants await further US economic data and brace for the Jul. 9 tariff deadline, dealers said. 

"Rupee has been rangebound since the last three days," said a dealer at a private-sector bank. "Apart from occasional profit booking by FPIs and oilers (oil marketing companies), there is nothing really much happening in the market."

After moving in a range of over 18 paise during the day, the rupee settled at 85.7025 against the greenback, down sharply from its previous close of 85.5200. The Indian unit fell 0.2% against the dollar. Other Asian currencies also weakened against the dollar as investors weighed the tax cut and spending bill of President Donald Trump. Other Asian currencies fell 0.1-0.7%, with the Malaysian ringgit being the worst hit.

The rupee started the day slightly weaker against the dollar at 85.5825 as importers purchased the greenback, fearing a further fall in the rupee, dealers said. Importers expect the rupee to weaken in the coming days in the face of uncertainty stemming from the Jul. 9 US tariff deadline. The aggressive reciprocal tariffs imposed by the US will come into effect immediately after the 90-day pause ends Jul. 8, before which many countries, including Japan, South Korea, and India, are trying to get some concessions in tariffs even if they are unable to complete their respective trade deals with the US by then.

The rupee was also weighed down by oil marketing companies purchasing dollars to take advantage of the relatively lower dollar/rupee levels, dealers said. Oil importers also purchased dollars to take advantage of the relatively lower crude oil prices as geopolitical tensions in West Asia could still be round the corner, dealers said.

Crude oil prices remained broadly steady during the day as investors await a decision by the Organization of the Petroleum Exporting Countries and allies at their upcoming meeting Sunday. The group is widely expected to increase production by 411,00 barrels per day in August. At 1530 IST, the September Brent Crude contract on the Intercontinental Exchange was at $67.65 per barrel against $67.11 per barrel Tuesday and $67.61 per barrel Monday.

However, a further fall in the rupee was limited as the dollar index remained weak, dealers said. The dollar changed little as market participants assessed Trump's tax-cut and spending bill. Republicans in the US Senate Tuesday passed the massive tax-cut and spending bill, which will now cut taxes, reduce social security programmes, and boost military spending and immigration enforcement. The bill is expected to add at least $3.3 trillion to the US national debt.

Data published Tuesday showed job openings in the US increased unexpectedly in May despite a decline in hiring as the US labour market begins softening amid uncertainty over Trump's trade policies. Job openings rose 374,000 to 7.77 million by May 31. The reading was higher than analysts' estimate of 7.30 million vacancies. Hiring, however, decreased 112,000 to 5.5 million.

The Institute of Supply Management's Purchasing Managers' Index for the US rose to 49.0 from 48.5 in May, higher than analysts' expectation of a reading of 48.8. A reading above 50 indicates expansion in activity while a reading below 50 indicates contraction.

Investors also assessed the dovish remarks from US Federal Reserve Chair Jerome Powell Tuesday, who did not rule out the possibility of a 25 basis-point rate cut at the Fed's Jul. 29-30 meeting. "We are simply taking some time," Powell said. "As long as the US economy is in solid shape, we think that the prudent thing to do is to wait and learn more and see what those effects (of US tariffs) might be."

At 1530 IST, the dollar index, which measures the strength in the dollar against a basket of six major currencies, was at 96.89, broadly steady from 96.65 Tuesday and 96.79 Monday. The index fell to 96.38 Tuesday, its lowest level since February 2022. "Dollar demand is there from importers everyday, but since the dollar index is also weak, it's providing some relief," a currency trader at a brokerage firm said.

FORWARDS

The one-year dollar/rupee forward premium ended slightly higher Wednesday, despite a slight increase in the benchmark US Treasury yield, dealers said. The yield on the 10-year benchmark US Treasury note rose to 4.28% in early European trade from Tuesday's close of 4.26%, which was itself up from Monday's 4.24%.

An increase in the banking system liquidity pushed forward premiums lower, dealers said. Near-term forwards were the ones most affected by a rise in the banking system liquidity surplus.

The one-year exact period dollar/rupee forward premium was 171.02 paise at 1530 IST, a slight rise from 169.84 paise Tuesday. On an annualised basis, the premium was 1.99%, up marginally from 1.99% Tuesday.

OUTLOOK

Thursday, 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. Market participants await the US ADP employment report due later in the day for more indications about the US labour market and overall economy, 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. Should the rupee come under intense pressure, dealers expect the Reserve Bank of India to step in with dollar sales to prevent the currency from falling sharply and to curb excessive market volatility.

During the day, the rupee is seen moving in a range of 85.50-86.00 against the greenback. Dealers see immediate technical suppor for the Indian currency at 85.40 a dollar.

India Rupee - World FX: Euro down as eurozone May jobless rate rises to 6.3%

MUMBAI – The euro fell 0.3% against the greenback after data released Wednesday showed unemployment in the eurozone rose to 6.3% in May from 6.2% in April. A poll by The Wall Street Journal had forecast the rate to be 6.2% in May as well. Market participants now await an update on the pause in US reciprocal tariffs, which is scheduled to end Jul. 8. European Central Bank policymaker Olli Rehn said Wednesday that the central bank should remain vigilant as global economic uncertainty could risk inflation falling below 2%.

The dollar index recovered slightly after falling to an over-three-year low Tuesday, ahead of the release of the US June ADP National Employment report later in the day. The dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 96.94 at 1500 IST, up slightly from Tuesday's 96.65 and Monday's 96.79.

Data released Tuesday had shown that job openings in the US increased by 374,000 to 7.769 million by the last day of May. Economists polled by Reuters had forecast 7.300 million vacancies. Moreover, US Federal Reserve Chair Jerome Powell said Tuesday that the central bank would wait to assess the impact of tariffs on inflation before starting to cut rates again.

Powell said the central bank plans to wait for more data before starting monetary policy easing but did not rule out a rate cut in July. He said it was too early to determine if July is the right time for a rate cut, emphasising that decisions will be made on a meeting-by-meeting basis based on incoming data. "In effect, we went on hold when we saw the size of the tariffs and essentially all inflation forecasts for the US went up materially as a consequence of the tariffs," Powell said.

The Institute of Supply Management released the latest figures for its manufacturing Purchasing Managers' Index, indicating a slight uptick in the health of the manufacturing sector in the US. The manufacturing Purchasing Managers' Index increased to 49.0 in June from a six-month low of 48.5 in May. A reading above 50 indicates an expansion in the sector, while a reading below 50 signals a contraction.

The pound sterling fell 0.4% against the greenback. Bank of England policymaker Alan Taylor said Wednesday that a soft landing on interest rates was at risk and that big rate cuts may not be necessary. The Australian dollar was down 0.3% against the US dollar. The Canadian dollar was down 0.1% against the US currency.  (Sourabh Kumar)

India Rupee: Premium inches lower on rise in US yield, liquidity surplus

MUMBAI – The one-year dollar/rupee forward premium inched slightly lower Wednesday, tracking a slight increase in the benchmark US Treasury yield, dealers said. The yield on the 10-year benchmark US Treasury note rose to 4.28% in early European trade from Tuesday's close of 4.26%, which was itself up from Monday's 4.24%.

An increase in the banking system liquidity also pushed forward premiums down. The Reserve Bank of India net absorbed INR 3.32 trillion Tuesday, higher than INR 2.62 trillion Monday. "There is no major movement in forwards right now, though some receiving is there because of liquidity and US yields," a dealer with a state-owned bank said. 

The one-year exact period dollar/rupee forward premium was 169.66 paise at 1401 IST, a slight fall from 169.84 paise Tuesday. Annualised, the premium was 1.98%, down marginally from 1.99% Tuesday. Near-term forwards were the ones most affected by a rise in the banking system liquidity surplus.

Some market participants sold forward dollars as the chances of a US rate cut in July--which were already low--fell further after US Federal Reserve Chair Jerome Powell's comments. The US central bank will wait to assess the impact of tariffs on inflation before starting to cut benchmark rates again, Powell said Tuesday. "As long as the U.S. economy is in solid shape, we think that the prudent thing to do is to wait and learn more and see what those effects might be," Powell said. The odds of a 25 basis-point rate cut fell to around 19%, from about 25% a week ago, as per the CME FedWatch tool.

The US Job Openings and Labor Turnover Survey, released Tuesday, showed higher-than-expected job openings in the world's largest economy in May. Job openings rose to 7.769 million by the end of May, up from 7.30 million forecast by economists in a poll by Reuters. Market participants now wait to see if President Donald Trump extends the pause on reciprocal tariffs or removes it after Jul. 8.

In terms of the movement of dollar/rupee forward premiums, uncertainty around the US economy prevails amongst market participants and therefore "a one-way move is not likely right now", a dealer with another state-owned bank said. "All depends on US data, but for now, one-year (forward premium) is seen around current levels. There would be receiving if the levels reach 2.0%." Market participants now await the release of the US June ADP National Employment report, due later in the day.  (Sourabh Kumar)

India Rupee: Down as importers, FPI buy dollars; weak dollar index lends support

MUMBAI – The rupee was down against the dollar Wednesday as banks bought dollars on behalf of oil marketing companies and foreign portfolio investors, dealers said. "Oilers (oil marketing companies) are bidding because rupee levels are good and you never know when geopolitical tension is going to flare up in West Asia," a dealer at a private sector bank said.

Crude oil prices remained broadly steady as the Organization of the Petroleum Exporting Countries and its allies, at their upcoming meeting on Sunday, are seen increasing production by 411,000 barrels per day in August. At 1317 IST, the September Brent Crude contract on the Intercontinental Exchange was $67.18 per barrel, against $67.11 per barrel Tuesday and $67.61 per barrel Monday.

Some banks also purchased the greenback on behalf of overseas investors, who withdrew funds from the domestic stock market, dealers said. At 1318 IST, the benchmark stock indices, Nifty 50 and Sensex, were down 0.4%.

Other importers also purchased dollars to take advantage of the lucrative dollar/rupee levels, as they expect the rupee to fall further in the coming days owing to uncertainty ahead of the Jul. 9 US tariff deadline. As a result, the rupee fell to the day's low of 85.7525 a dollar.

However, the fall was limited due to the sustained weakness in the dollar index, dealers said. At 1322 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 96.87, steady from 96.65 Tuesday and 96.79 Monday.

For the rest of the day, the rupee is seen moving in a range of 85.40-85.90 against the greenback. Dealers peg key technical support for the Indian unit at 85.90 a dollar.  (Gowri Lakshmi)

India Rupee: Technical levels for rupee - Jul 2

NEW DELHI – At 1122 IST, the rupee was at 85.6900 per dollar. At 0900 IST, the rupee was at 85.5825 a dollar, against the previous close of 85.5200. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Gowri Lakshmi and Pratiksha)

India Rupee - Asia FX: Most down; investors assess Trump's tax-cut bill

MUMBAI – Most Asian currencies were down against the dollar Wednesday as investors weighed the impact of US President Donald Trump's tax-cut and spending bill. Republicans in the US Senate Tuesday passed the massive tax-cut and spending bill, which would now cut down taxes, reduce social security programmes and boost military and immigration enforcement. The bill is expected to add at least $3.3 trillion to the US national debt.

The Job Openings and Labor Turnover Survey showed that jobs openings in the US increased unexpectedly in May, despite a decline in hiring as the US labour market begins softening amid uncertainty over Trump's trade policies. The job openings, a measure of labour demand, rose 374,000 to 7.77 million by May 31. The reading was higher than the analyst estimate of 7.30 million vacancies. Hiring, however, decreased 112,000 to 5.5 million. 

Further, the US ISM purchasing managers' index rose to 49.0 from 48.5 in May and was above the analyst expectations of 48.8, according media reports. A PMI reading above 50 indicates expansion in activity while below 50 indicates contraction. 

Investors also assessed the dovish remarks from US Federal Reserve Chair Jerome Powell Tuesday, who did not rule out the possibility of a 25-basis-point rate cut at the Fed's Jul. 29-30 meeting. "We're simply taking some time," Powell said. "As long as the US economy is in solid shape, we think that the prudent thing to do is to wait and learn more and see what those effects might be."

At 1028 IST, the dollar index, which measures the strength in the dollar against a basket of six major currencies, was at 96.70, broadly steady from 96.65 Tuesday and 96.79 Monday. The index fell to 96.38 on Tuesday, its lowest level since February 2022. The Malaysian ringgit was down 0.5% and the Taiwan dollar rose 0.2%. 

The South Korean won was down 0.1% against the US currency after data published earlier in the day showed consumer prices rose 2.2% on year in June, up from 1.2% rise in May. Bank of Korea Governor Rhee Chang-yong said that the central bank still remains worried over the impact of the aggressive tariffs by the US on its economic growth rather than inflation and is mulling over how to keep lowering the interest while also factoring in stability risks. 

The Chinese yuan and the Philippine peso traded flat against the greenback. The Indonesian rupiah fell 0.2% against the greenback after Bank Indonesia Governor Perry Warjiyo said Tuesday there could be room for further rate cuts, stating that the country needs to make extra efforts to revive economic growth. 

The Thai baht traded flat against the greenback amid heightened domestic political turmoil. Thailand's Prime Minister Paetongtarn Shinawatra was suspended from her duties Wednesday after the Constitutional Court considered a petition alleging dishonesty and ethical breaches by her. The case against Shinawatra stirs from a leaked phone call on Jun. 15 with Cambodia's former prime minister Hun Sen, in which the former appeared to criticise a senior Thai military commander, according to media reports.  (Gowri Lakshmi)

India Rupee: Down on importers' dollar buys amid weaker-than-usual volume

MUMBAI – The rupee was lower against the dollar Wednesday as importers purchased the greenback to take advantage of the relatively lower dollar/rupee levels, dealers said. Some dealers also said a few importers may have purchased the greenback, fearing a further fall in the Indian currency, dealers said. Volume in the currency market also remained lower than usual as most market players await more economic data from the US, dealers said. 

"Volume is dull. Nothing major is really happening in the market. Everyone is just waiting for fresh cues, especially the NFP (non-farm payrolls)," a dealer at a private sector bank said. 

The dollar index was also little changed in early trade as investors weighed the spending bill of US President Donald Trump. On Tuesday, the US Senate passed the massive tax cut-and-spending bill which would now cut down taxes, reduce social security programmes and boost military and immigraion enforcement. The bill is expected to add at least $3.3 trillion to the US national debt. 

At 0951 IST, the dollar index, which measures the strength in the dollar against a basket of six major currencies, was at 96.68, broadly steady from 96.65 Tuesday and 96.79 Monday. The index fell to 96.38 on Tuesday, its lowest level since February 2022.

Investors also assessed the dovish remarks from US Federal Reserve Chair Jerome Powell Tuesday, who did not rule out the possibility of a 25-basis-point rate cut at the Fed's Jul. 29-30 meeting. "We're simply taking some time," Powell said. "As long as the US economy is in solid shape, we think that the prudent thing to do is to wait and learn more and see what those effects might be."

During the day, the rupee is seen moving in a range of 85.30 to 85.80 against the greenback. Dealers peg key technical support for the rupee at 85.70 a dollar.  (Gowri Lakshmi)

India Rupee: Expected range for rupee - Jul 2

MUMBAI – Following are the expected support and resistance levels for the rupee on Wednesday, 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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