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Informist, Friday, Jul. 4, 2025

By Gowri Lakshmi

MUMBAI – The rupee ended lower against the dollar Friday following a slight rise in the dollar index, dealers said. Importers' dollar buys, fearing a sharp fall in the rupee also weighed on the rupee, dealers said. Volume in the currency market remained lower-than-usual as the US financial markets were shut on account of Independence Day. 

"The rupee initially did not reflect the dollar levels and later in the day it tracked the dollar index and got weighed down," a dealer at a private sector bank said. 

After moving in a range of just 19 paise during the day, the rupee settled the week at 85.3925, against its previous close of 85.3100. The rupee erased all the gains from Thursday at the opening itself. On a weekly basis, the Indian unit, however, strengthened marginally by 0.1% against the US currency. 

Other Asian currencies ended mixed after trading lower against the greenback in early trade. The Thai baht was worst hit, falling 0.3% against the greenback while the Taiwan dollar gained the most. Market participants now await details on the interim US-India trade deal, which is likely soon. On Thursday, media reports said New Delhi and Washington would likely sign a trade deal within 2 days as the negotiations concluded and the deal was in the final stages.

The rupee opened lower against the greenback at 85.3900 as the dollar index rose after upbeat US jobs data, dealers said. The US non-farm payrolls for June increased by 147,000 jobs, beating analysts' expectations of a rise of 110,000 in a Reuters poll. The data also showed unemployment rate fell to 4.1% in June from 4.2% in May.

The initial jobless claims data for the week ended Jun. 28 showed that the number of Americans filing for unemployment benefits fell to 233,000, lower than the forecast of 237,000. The better-than-expected jobs data reinforced that the US labour market was still in a solid shape and has diminished the expectation of an early rate cut by the US Federal Reserve.

According to the CME FedWatch tool, traders now see a 94.8% probability of the US Fed holding the Federal Funds target range steady at 4.25-4.50%, from a 76.2% probability a day ago, before the data sets were published. At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 96.97, broadly steady from 97.13 Thursday and up from 96.77 Wednesday. 

Some dealers speculated that the the Reserve Bank of India may have sold dollars in the offshore non-deliverable forwards market, where the rupee was trading around 85.51 a dollar before domestic spot markets opened.

In early trade, a sharp fall in the rupee was limited as banks sold the greenback on behalf of exporters, who feared a rise of the rupee during the day, dealers said. 

However, the rupee came under pressure as importers purchased the greenback to take advantage of the relatively lower crude oil prices, dealers said. They said a few banks also purchased the greenback on behalf of foreign portfolio investors, who withdrew from domestic stock market. The benchmark stock indices, however, ended 0.2% higher from its previous close. 

"Next week we can expect some rupee appreciation. Like how the deal with Vietnam took place, India too will have a good deal but it is filled with hurdles," another dealer at a private sector bank said. 

FORWARDS

The one-year dollar/rupee forward premium ended sharply down as the yield on the benchmark 10-year US Treasury note rose Thursday after better-than-expected US jobs data, dealers said. The yield on the 10-year US Treasury note inched up by 5 basis points to end at 4.35% on Thursday. An increase in rupee liquidity in the banking system also weighed on premiums, dealers said. 

The one-year dollar/rupee forward premium fell to a low of 1.98% earlier in the day. Premiums also fell as liquidity surplus in the banking system surpassed INR 4 trillion Thursday, dealers said. However, a further fall in premiums was capped as banks bought dollars for forward delivery, in order to take advantage of the arbitrage opportunity between onshore forward premiums and offshore non-deliverable forward premiums, dealers said. 

At 1530 IST, the one-year exact period dollar/rupee forward premium was 2.01%, down from 2.06% on Thursday. On an absolute basis, the premium was 171.68 paise, against 176.22 paise Thursday.

OUTLOOK

Currency market is shut Saturday. On Monday, the rupee will take cues from the movement in the dollar index and crude oil prices, dealers said. Investors look forward to the Organisation of Petroleum Exporting Countries and its allies on Sunday, where they are widely expected to increase output. If the decision is in line with expectations, oil prices are expected to dip slightly. This may likely prompt oil marketing companies to purchase the greenback to take advantage of the lucrative crude oil prices, dealers said. This may put the rupee under pressure. 

However, dealers also expect overseas investors to invest in Indian financial markets, which may prevent the rupee from falling sharply, even if it comes under pressure. Should the rupee come under immense pressure, dealers expect the RBI to step in with dollar sales to limit the rupee's fall and curb excess volatility. 

Dealers expect the optimism around India-US trade deal to support the rupee as we inch closer to the Jul. 9 tariff deadline. Monday, the rupee is seen moving in a range of 85.30-85.70 against the greenback. Dealers see immediate technical support for the Indian currency at 85.65 a dollar. 

India Rupee - World FX: Yen rises 0.4% on strong household spending data

NEW DELHI – The Japanese yen rose 0.4% against the dollar Friday after a robust household spending data in Japan renewed hopes for a strong growth in the world's third-largest economy. Data released Friday showed household spending in Japan rose by 4.7% on year in May, the fastest increase since August 2022, and well above expectations of a 1.2% rise. In April, spending had declined 0.1%. The economic data increased expectation of a 25-basis-poins rate hike by the Bank of Japan at its policy meeting this month. 

The Australian dollar was down 0.2% against the US unit on expectation that the Reserve Bank of Australia will go for the third interest rate cut of the year at its Jul. 8 policy meeting. The New Zealand dollar fell 0.1%, tracking the Australian currency. 

The euro rose 0.2% against the greenback. However, data released Friday showed German industrial orders fell much more than expected in May. The pound sterling was largely flat against the dollar. 

Markets in the US are closed Friday for Independence Day. Market participants' attention has now turned to President Donald Trump's Jul. 9 deadline, when sweeping tariffs take effect. Several large trading partners, including the European Union and Japan, are yet to clinch trade deals. Many countries will get letters on Friday specifying what tariff rates they will face, marking a shift from earlier pledges to do individual deals with trading partners, according to Trump.

The dollar index gave up some of the gains it notched on Thursday. It gained on Thursday after data showed the US economy created more jobs than expected, leading to expectations that the US Federal Reserve may take longer to cut interest rates.

Data showed that nonfarm payrolls increased by 147,000 jobs in June. Economists polled by Reuters had forecast a rise of 110,000. Fed fund futures now see a 95.3% probability of the Fed leaving rates unchanged at its July meeting, up from 76.2% a day ago, according to the CME's Fedwatch tool. At 1605 IST, the dollar index, which measures the strength in the dollar against a basket of six major currencies, was at 96.94, against 97.13 Thursday and 96.77 Wednesday. (Pratiksha)

India Rupee:Stays down on importers' dollar buys; fall in local shares weigh

MUMBAI – The rupee remained down against the dollar as banks purchased the greenback for importers, dealers said. A slight fall in domestic equities also weighed the Indian currency down, they said. The rupee has moved 19 paise so far in the day. "Market is quiet cold because of dull volume, nothing major happening, and the levels are also reflecting the rise in dxy (dollar index)," a dealer at a private-sector bank said.

The rupee came under pressure as importers purchased the greenback, fearing a sharp fall in the rupee as the dollar index rose slightly after upbeat US jobs data, dealers said. The US currency gained after US non-farm payrolls increased by 147,000 jobs in June, beating analysts' expectations in a Reuters poll of a rise of 110,000.

The dollar was also supported by initial jobless claims for the week ended Saturday showing the number of Americans filing for unemployment benefits fell to 233,000, below the forecast of 237,000. At 1410 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 96.99, broadly steady from 97.13 Thursday and up from 96.77 Wednesday.

Dealers said a few banks also purchased dollars on behalf of overseas investors who withdrew funds from the domestic stock market. This also put some pressure on the Indian currency, according to some dealers. At 1411 IST, the benchmark stock indices, the Nifty 50 and the BSE Sensex, were both down 0.1%. 

For the rest of the day, the rupee is seen moving in a range of 85.30-85.55 against the greenback. Dealers see the key immediate support for the rupee at 85.55 a dollar.  (Gowri Lakshmi)

India Rupee: Technical levels for rupee - Jul 4

NEW DELHI – At 1120 IST, the rupee was at 85.3500 per dollar. At 0900 IST, the rupee was at 85.3900 a dollar, against the previous close of 85.3100. 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 as dollar index rises after strong jobs data

NEW DELHI - Most Asian currencies fell against the dollar on Friday as the dollar index rose after data showed the US economy created more jobs than expected, leading to expectations that the US Federal Reserve may take longer to cut interest rates.

Data on Thursday showed that nonfarm payrolls increased by 147,000 jobs in June. Economists polled by Reuters had forecast a rise of 110,000. Fed fund futures now see a 93.5% probability of the Fed leaving rates unchanged at its July meeting, up from 76.2% a day ago, according to the CME's Fedwatch tool. Markets in the US are closed on Friday on account of Independence Day. 

At 1015 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 96.95, against 97.13 Thursday and 96.77 Wednesday. Market participants have now turned their focus to President Donald Trump's Jul. 9 deadline, when sweeping reciprocal tariffs take effect on multiple countries. Trump said the US will start sending letters to countries on Friday specifying what tariff rates they will face.

The Philippine peso fell 0.4% against the dollar, the most among its Asian peers. Further, data on Friday showed the country's annual inflation rose slightly in June, but remained below the central bank's target range, leaving the door open for further interest rate cuts to support economic growth. The consumer price index rose by 1.4% year-on-year in June, slightly above May's 1.3%, but below the 1.5% increase forecast in a Reuters poll.

The Malaysian ringgit fell 0.2% against the dollar, while both the Taiwan dollar and the South Korean won fell 0.1%. South Korea's Trade Minister Yeo Han-koo will leave for the US on Friday for tariff talks. Meanwhile, after a year of market reforms to open up the onshore foreign exchange market, South Korea has come up with new measures to support currency trading during extended market hours, its finance ministry said on Friday.

Bucking the trend, both the Thai baht and Chinese yuan rose 0.2% against the greenback. On Thursday, the US lifted restrictions on exports to China for chip design software developers and ethane producers, showing signs of de-escalating US-China trade tensions.  (Pratiksha) 

India Rupee: Tad down as dollar index rises after US jobs data; volume dull

MUMBAI – The rupee was slightly down against the US dollar Friday as the dollar index inched up after better-than-expected US jobs data, dealers said. Volume in the currency market was lower than usual as the US financial markets are shut on account of independence day. "Surprisingly, the rupee opened higher than expected despite the rise in dollar index," a dealer at a private sector bank.

The dollar index, which has struggled to gain some traction this week, rose slightly after the US non-farm payrolls for June increased by 147,000 jobs, beating analysts' expectations of a rise of 110,000 in a Reuters poll. The data also showed unemployment rate fell to 4.1% in June from 4.2% in May.

Initial jobless claims data for the week ended Jun. 28 showed that the number of Americans filing for unemployment benefits fell to 233,000, lower than the forecast of 237,000. The better-than-expected jobs data has reduced expectations of an early rate cut by the US Federal Reserve. According to the CME FedWatch tool, traders now see a 94.8% probability of the US central bank holding the Federal Funds target range steady at 4.25-4.50%, from a 76.2% probability a day ago, before the data sets were published.

At 0933 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 96.98, broadly steady from 97.13 Thursday and up from 96.77 Wednesday.

Sharp fall of the rupee was prevented as a few banks sold dollars on behalf of exporters, who fear the Indian currency will appreciate later in the day, dealers said. Some dealers also speculate that the Reserve Bank of India sold dollars in the offshore non-deliverable forwards market before the domestic market opened. The rupee was trading around 85.51 a dollar in the NDF market.

During the day, the rupee is expected to move in a range of 85.30-85.70 against the greenback. Dealers peg immediate technical support for the rupee at 85.55 a dollar.  (Gowri Lakshmi)

India Rupee: Expected range for rupee - Jul 4

MUMBAI – Following are the expected support and resistance levels for the rupee on Friday, as forecast by leading banks and brokerages in an Informist poll:

(Gowri Lakshmi and Pratiksha)

End

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

Edited by Akul Nishant Akhoury

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