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Informist, Monday, Jul. 7, 2025

By Gowri Lakshmi

MUMBAI – The rupee ended near a two-week low against the dollar Monday as banks persistently purchased the greenback on behalf of foreign portfolio investors and oil marketing companies, dealers said. A slight rise in the dollar index amid heightened worries over US tariff policies also weighed, they said. However, likely dollar sales by the Reserve Bank of India and exporters limited the fall in the rupee, dealers said. 

"Today's fall (in rupee) was inevitable, though not expected this soon, after the recent comments on tariffs," a dealer at a private sector bank said. 

After moving in a range of over 45 paise during the day, the rupee ended at 85.8500, down 0.5% from its previous close of 85.3925. The Indian currency ended at its lowest closing level since Jun. 25.

Most other Asian currencies also slipped against the greenback as investor sentiment was hit by uncertainty over US tariff policies. Other Asian currencies fell between 0.1-0.7% against the dollar, with the Thai baht being the worst hit, followed by the Indian rupee. 

The rupee opened sharply lower at 85.5700 a dollar, before slumping further as foreign portfolio investors withdrew funds from Indian financial markets to other safe-haven assets on worries over US tariffs and trade policy uncertainties, dealers said. 

US President Donald Trump Sunday said some trade deals had been made with trading partners and others would be notified of their higher tariff rates. US Commerce Secretary Howard Lutnick told reporters the higher tariffs would take effect on Aug. 1, hinting at a three-week reprieve. In April, Trump announced reciprocal tariffs on most of its trading partners but paused them till Jul. 9 to negotiate trade deals. 

Trump late Sunday said the US will impose an additional 10% tariff on countries aligning with "anti-American policies" of the BRICS group of nations, a bloc in which India is a member. A joint declaration by heads of the BRICS member states had raised "serious concerns" about the rise of unilateral tariffs and non-tariff measures, which distort trade and are inconsistent with World Trade Organization rules. 

"There will be no exceptions to this policy," Trump said in a post on the social media platform Truth Social. Earlier in December, he had called for 100% tariffs on exports from BRICS nations to the US if these countries attempted to replace the dollar as the trading currency. 

"Trump's deadline of Jul. 9 is approaching, and there have been no signs of an India-US trade deal happening..." Anil Kumar Bhansali, head of treasury, Finrex Treasury Advisors, said in a note. "... and Trump has said he would impose at least 10% additional tariffs on BRICS countries if their policies are anti-American. This has put the India-US deal in jeopardy."  

The rupee came under further pressure as public-sector banks purchased the greenback ahead of the reference-rate fixing window, dealers said. The rupee plunged as oil marketing companies bought dollars aggressively after Saudi Arabia's state-owned oil company Aramco Sunday raised its official selling price for Arab Light crude oil destined for Asia in August. The company raised the price of its benchmark oil to $2.20 per barrel above the average of Oman and Dubai crude prices.

India imports over 18% of its crude oil from Saudi Arabia. A rise in these prices will put pressure on India's import bill, thereby weighing on the rupee. 

Due to persistent dollar demands from overseas investors and oil marketing companies, the rupee hit a near two-week low of 86.0275 a dollar. However, a steeper fall of the rupee was prevented as the RBI likely stepped in around 85.98-86.00 a dollar and below levels, dealers said. Moreover, most exporters were waiting for the rupee to breach the 86 per dollar mark, and they sold the greenback at that level to take advantage of the lucrative dollar/rupee levels. Some traders also trimmed their long dollar position due to the sustained weakness of the US dollar, dealers said. This provided an additional cushion for the rupee, according to dealers. 

However, the dollar index rose slightly during the European market hours, likely due to weakness in the euro and Japanese yen. This weighed on the Indian unit, dealers said. At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.40, slightly up from 97.13 Thursday and 96.77 Wednesday. 

FORWARDS 

The one-year dollar/rupee forward premium ended lower Monday as a sharp fall in the rupee prompted banks to sell dollars for forward delivery on behalf of exporters, dealers said. The rupee slumped over 63 paise against the US currency in the spot market and fell below the psychologically crucial 86-per-dollar mark as banks purchased dollars on behalf of foreign portfolio investors, as worries about the US reciprocal tariffs loomed large.

The dollar/rupee exchange rate is a component of the premium received by exporters for selling forward dollars. A rise in the dollar/rupee, that is, a fall in the rupee, pushes the receivable premiums up thus encouraging exporters to book contracts at those levels. 

However, some 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. This limited a further fall in the dollar/rupee forward premium, they said.

At 1530 IST, the one-year exact period dollar/rupee forward premium was at 1.98%, down from 2.01% on Friday. On an absolute basis, the premium was 170.14 paise, against 171.69 paise Friday.

OUTLOOK

On Tuesday, the rupee will take cues from the movement in the dollar index and crude oil prices, dealers said. Investors will keep an eye on developments on the trade policy front, dealers said. The rupee may come under pressure as overseas investors are likely to continue withdrawing funds from the domestic financial markets owing to uncertainties, dealers said. 

Importers may also purchase the greenback, fearing a sharper fall in the rupee, dealers said. This will likely put the rupee under further pressure, they said. However, should the rupee come under sharp downward pressure, the RBI is likely to step in with its dollar sales. Dollar sales by exporters, who want to take advantage of the relatively higher dollar/rupee levels, may also limit the losses of the Indian unit, dealers said. 

During the day, the rupee is likely to move between the range of 85.70-86.30 against the dollar. Dealers peg key immediate technical support for the rupee at 86.10 against the greenback. 

India Rupee - World FX: Yen down as Japan's real wages fall to near 2-yr low

MUMBAI – The Japanese yen slipped 0.6% against the dollar after Japanese workers' real wages dropped to the lowest level since September 2023 as inflation continued to outpace wage growth. Real wages fell 2.9% on year in May, higher than analysts' forecast of a 1.7% fall in a Bloomberg poll. Nominal wages rose 1% on year.

The dollar index rose slightly, likely owing to safe-haven flows, as worries over US tariff re-emerged. US President Donald Trump Sunday said some trade deals had been made with trading partners and others would receive letters notifying them of their higher tariff rates. US Commerce Secretary Howard Lutnick told reporters higher tariffs would take effect on Aug. 1 and that Trump was "setting rates and deals right now". 

In April, Trump had announced a 10% base tariff on most of its trading partners and higher additional import duties, which was given a deadline of Jul. 9 to take effect. Lutnick's comments now hints at a three-week reprieve.

At 1525 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.40, slightly up from 97.13 Friday and 96.77 Thursday. The Australian dollar and the New Zealand dollar were down 1.0% and 1.1%, respectively, as uncertainty around the US trade and tariff policies hit investor sentiment.

The euro was down 0.4% against the US currency. However, losses in the currency were limited after the eurozone's retail sales rose 1.8% on year in May, following a revised 2.7% rise the previous month. The data was stronger than analysts' estimate of a 1.2% rise. Germany, the euro bloc's largest economy, also logged a better-than-expected industrial output. Germany's industrial output rose 1.2% in June, against the analyst forecast of the output growth remaining flat at 0%.

The Canadian dollar was down 0.6% as the commodity-linked currency was impacted by a fall in crude oil prices. Crude oil prices declined after the Organization of the Petroleum Exporting Countries and its allies surprised markets with a higher-than-expected output hike in August, raising concern about over-supply amid weak demand. The OPEC+ on Saturday decided to raise production by 540,000 barrels per day in August. OPEC+ cited steady global economic outlook and solid market fundamentals as reasons for the output hike. 

The September Brent Crude contract on the Intercontinental Exchange hit a one-week low of $67.22 per barrel earlier in the day, against $68.30 per barrel Friday and $68.80 per barrel Thursday.

The Swiss franc was down 0.4% while the pound sterling fell 0.5% against the greenback. (Gowri Lakshmi)

India Rupee: Fwd premium falls as exporters sell fwd dlrs on slump in rupee

MUMBAI – The one-year dollar/rupee forward premium fell Monday as a sharp fall in the rupee prompted banks to sell dollars for forward delivery on behalf of exporters, dealers said. "Forwards will remain up, but as spot (dollar/rupee) moves up forwards fall," a currency trader at a brokerage firm said. 

The rupee slumped nearly 60 paise against the US currency in the spot market and fell below the psychologically-crucial 86-per-dollar mark as banks purchased dollars on behalf of foreign portfolio investors as worries about the US reciprocal tariffs loom large. 

US President Donald Trump Sunday said some trade deals had been made with trading partners and others would receive letters notifying them of their higher tariff rates on Monday. US Commerce Secretary Howard Lutnick told reporters the higher tariffs would take effect on Aug. 1, hinting at a three-week repreive. Forwards of a currency pair are reflective of the interest rate differential between two countries.

However, some 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. This limited a further fall in the dollar/rupee forward premium, they said.

At 1440 IST, the one-year exact period dollar/rupee forward premium was 1.98%, down from 2.01% on Friday. On an absolute basis, the premium was 170.00 paise, against 171.69 paise Friday.  (Gowri Lakshmi)

India Rupee: Slumps to near 2-wk low on FPI outflows, dollar buys by oil cos

MUMBAI – The rupee slumped further against the dollar Monday as banks purchased dollars on behalf of foreign portfolio investors, dealers said. Oil marketing companies and other importers also aggressively purchased the greenback, leading the rupee to hit a near two-week low, dealers said.

"It's majorly FPI outflows today (Monday), the rupee broke two key resistance levels (86.65-85.75). Breaching 85.80 (a dollar) today itself wasn't expected," a dealer at a private-sector bank said. 

The rupee came under immense pressure as banks purchased the greenback for overseas investors as sentiment dampened due to rising worries over the US reciprocal tariffs, dealers said. FPIs withdrew funds from domestic financial markets and moved to other safe haven assets amid heightened uncertainty over US trade policies, dealers said. At 1242 IST, both the benchmark stock indices were down 0.1%. 

US President Donald Trump Sunday said some trade deals have been agreed with trading partners and others would be notified of the higher tariff rates for non-compliance. US Commerce Secretary Howard Lutnick told reporters the higher tariffs would take effect on Aug. 1, hinting at a likely three-week reprieve now.

Oil marketing companies also aggressively purchased the greenback, dealers said. Saudi Arabia's state-owned oil company Aramco Sunday raised its official selling price for Arab Light crude oil destined for Asia in August. The company raised the price of its benchmark oil to $2.20 per barrel above the average of Oman and Dubai crude prices. India imports over 18% of its crude oil from Saudi Arabia. A rise in these prices will put pressure on India's import bill, thereby weighing on the rupee.

The rupee was dragged to a near two-week low of 85.9375 as some public-sector banks purchased dollars during the reference-rate related fixing window, dealers said. "Buying for fixing is there, fixing is higher today so nats (nationalised banks) are buying," a currency trader at a brokerage firm said. 

For the rest of the day, the rupee is seen moving in a range of 85.70-86.00 against the greenback. Dealers peg key technical support for the rupee at 86.00 a dollar.  (Gowri Lakshmi)

India Rupee - Asia FX: Most units down; sentiment hit on US tariff fears

MUMBAI - Most Asian currencies slipped against the dollar Monday as investor sentiment was hit due to concerns over the US reciprocal tariffs re-emerging. US President Donald Trump Sunday said some trade deals have been agreed with trading partners and others would be notified of the higher tariff rates for non-compliance. US Commerce Secretary Howard Lutnick told reporters the higher tariffs would take effect on Aug. 1 and that Trump was "setting rates and deals right now". Lutnick's comments hint at a three-week reprieve now.

In April, Trump had announced a 10% base tariff on most of its trading partners and higher additional import duties, which were given a deadline of Jul. 9 to take effect. The dollar index was little changed as the US dollar began losing its safe-haven status owing to heightened uncertainty about the US' trade and tariff policies. 

At 1018 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.10, broadly steady from 97.13 Thursday and 96.77 Wednesday. The US financial markets were shut Friday on account of Independence Day.

The Thai baht was the worst hit in early trade, falling 0.7% against the greenback. Thailand's headline inflation fell for the fourth consecutive month in June, driven by lower energy and food prices. The consumer price index fell 0.25% in June, against market forecast of a 0.1% fall in a Reuters poll. 

Meanwhile, Bangkok has submitted its latest trade proposal to Washington, Thailand's Finance Minister Pichai Chunhavajira said Monday as the country tries to avert the steep tariffs. Thailand was hit by a 36% tariff by the US. "We heard their feedback and what they were especially interested in and we adjusted it," Chunhavajira, who returned from Washington last week, said. 

The Taiwan dollar was down 0.3% against the greenback. On Friday, media reports said Taiwan's central bank plans to take steps to tighten currency purchases by foreign stock investors, in a move to limit speculative bets after the recent surge in the Taiwan dollar. The central bank is deciding a policy that will require foreign investors, wanting to buy Taiwan stocks, to show proof of orders before they can purchase the Taiwan dollar, Bloomberg reported citing sources. 

The South Korean won fell 0.3% against the US currency. South Korean and its US counterparts have discussed extending the Jul. 9 tariff deadline for a trade agreement in a last-minute negotiation to avert the aggressive tariffs from taking effect. South Korea Trade Minister Yeo Han-koo held talks with US Trade Representative Jameison Greer Saturday in Washington, where Han-koo proposed manufacturing parternships and called for reduction of tariffs on automobile and steel products. 

Further, in an attempt to revive the sluggish South Korean economy, the government is rolling out a major cash handout programme, with payments scheduled to begin later this month. The plan is part of the larger $23.3 billion supplementary budget passed by South Korea's Parliament on Friday. 

The Philippine peso and the Malaysian ringgit were down 0.3%, each, against the greenback. Malaysia's central bank is likely to lower the benchmark lending rates at its monetary policy meeting Wednesday. 

The Indonesian rupiah was down 0.4% against the US unit. Indonesia's senior economic minister and the country's main negotiator in US tariff talks, Airlangga Hartarto, is scheduled to visit the US Monday. Indonesia was slapped with a sweeping reciprocal tariff of 32% and Jakarta has offered to cut duties to near-zero on key US goods. On Friday, Indonesia offered to cut duties to "near-zero" and buy $500 million worth of US wheat as part of its tariff negotiations with Washington.

The Chinese yuan was down 0.1% against the US unit. China Monday released a plan which outlined 14 specific tasks to encourage retraining of the rural workforce to improve their job prospects, Chinese state media reported. The plan is said to "strengthen housing security, create favourable conditions for rural workers in cities to enjoy basic public services equally and integrate into the local society as soon as possible," according to the state-owned media.  (Gowri Lakshmi)

India Rupee: Technical levels for rupee - Jul 7

MUMBAI – At 1045 IST, the rupee was at 85.6875 per dollar. At 0900 IST, the rupee was at 85.5700 a dollar, against the previous close of 85.3925. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Gowri Lakshmi and Pratiksha)

India Rupee: Tumbles on banks' dlr buys for FPIs as tariff worries re-emerge

MUMBAI – The rupee plunged Monday as banks purchased the greenback on behalf of foreign portfolio investors as sentiment was hit with worries over US tariffs re-emerging, dealers said. "It's a knee-jerk reaction as FPIs are pulling funds out on tariff related worries," a dealer at a private sector bank said. Dealers said some outflows were also on account of resumption of the US financial markets after Thursday.

The rupee slipped as overseas investors withdrew funds and moved to other safe-haven assets amid heightened tensions over the reciprocal tariffs by the US, dealers said. On Sunday, US President Donald Trump said some trade deals have been agreed with trading partners and others would be notified of the higher tariff rates for non-compliance. US Commerce Secretary Howard Lutnik Sunday said the higher tariffs would take effect on Aug. 1, hinting at a three-week reprieve. 

In April, Trump had announced a 10% base tariff on most of its trading partners and higher additional import duties, with a deadline of Jul. 9 to take effect. Trump, late Sunday, said he will impose additional 10% tariff on countries aligining with "Anti-American policies" of the BRICS group of nations, a bloc that India is a memeber of. In a joint declaration signed by leaders of the BRICS member states in Rio de Janeiro, they raised "serious concerns" about the rise of unilateral tariff and non-tariff measures which distort trade and are inconsistent with World Trade Organization rules. 

"There will be no exceptions to this policy," Trump said in a post on social media platform Truth Social. Sunday's fresh warning by the US is the second time that Trump has threatened to impose tariffs on BRICS nations. In December, he had called for 100% tariffs on exports from BRICS nations to the US if these countries attempted to replace the dollar as the trading currency.

At 0935 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.08, broadly steady from 97.13 Thursday and 96.77 Wednesday. The US markets were shut on Friday on account of Independence Day. 

During the day, the rupee is seen moving in a range of 85.40-85.85 against the greenback. Dealers peg key technical support for the rupee at 85.75 a dollar.  (Gowri Lakshmi)

India Rupee: Expected range for rupee - Jul 7

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 and Pratiksha) 

End

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

Edited by Saji George Titus

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