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Informist, Tuesday, Jul. 8, 2025

By Gowri Lakshmi 

MUMBAI – The rupee ended sharply higher against the dollar Tuesday as market participants remained optimistic about the possibility of an India-US trade deal, dealers said. Some banks also sold the greenback on behalf of exporters, which provided further cushion to the rupee, dealers said. However, a few importers purchased the greenback, which capped the rupee's gains. 

"The market is very dull, nothing really is happening. Most are waiting for some news on India-US trade deal," a currency trader at a brokerage firm said. 

After moving in a relatively narrow range of just over 17 paise during the day, the rupee settled at 85.6950 a dollar, sharply up from its previous close of 85.8500. The Indian unit appreciated 0.2% against the greenback. Volume in the currency market was lacklustre as traders refrained from placing any large bets as they awaited a trade deal to be struck between New Delhi and Washington. 

Most other Asian currencies also rebounded after falling in early trade, as investors continue to assess the impact of the latest tariff announcement from Washington. Other Asian currencies rose 0.1-0.7%, with the South Korean won being the biggest gainer.

The rupee opened higher at 85.7500 a dollar as investors breathed a sigh of relief as India was not in the initial list of countries which were hit by the sweeping reciprocal tariffs, dealers said. On Monday, US President Donald Trump announced a 25% tariff on Japan and South, effective Aug. 1. Trump later added that he was open to extensions of the tariff deadline if countries propose so.

Trump also sent letters to several trading partners, including Malaysia, Myanmar, Kazakhstan, Laos and South Africa, notifying them of the tariffs, which were close to those announced earlier in April. The tariff announcement sent shock waves across Asia-Pacific countries, with the Japanese yen and South Korean won tumbling 1% against the greenback overnight.

The dollar index strengthened slightly after the tariff announcement. At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.45, broadly steady from 97.52 Monday and slightly up from 97.13 Thursday. The dollar index hit a near two-week high of 97.67 Monday.

"The market is honestly bored with the tariff news now. No major cues or further details. It's almost the same news everyday," a dealer at a private sector bank said. 

Seeing the unexpected rise, a few banks sold the greenback on behalf of exporters, who feared a further apppreciation of the rupee and wanted to take advantage of the relatively higher dollar/rupee levels, dealers said. "There is some sporadic selling by exporters and that's it. Maybe some forein fund inflows too, but nothing to write home about," the dealer at the private sector bank said. 

However, the rise in the rupee was capped as some importers purchased the greenback to take advantage of the lucrative dollar/rupee levels, dealers said. Nevertheless, the currency market remained relatively calm after the sharp fall on Monday, dealers said. On Monday, the rupee fell 0.5% against the dollar and settled at a near two-week low of 85.8500 a dollar due to foreign portfolio outflows and a rise in the dollar index. "The market is stone-cold today (Tuesday). Today can be safely struck off by markets from the calendar," the dealer said. 

FORWARDS

The one-year dollar/rupee forward premium ended at a near two-week low on overnight rise in US Treasury yields, dealers said. Forwards of a currency pair are reflective of the interest rate differential between two countries.

The 10-year US Treasury yield rose to 4.42% from 4.36% at 1700 IST Monday after the US sent out fresh tariff rates to 14 trading partners but moved the date of implementation to Aug. 1 from Jul. 9. Uncertainty on tariffs is likely to continue for the next few weeks, and traders again shifted their focus to the concern of expanded US fiscal deficit and a lack of rate cuts by the US Federal Open Market Committee until at least September. 

Some banks stepped in to buy dollars for forward delivery on behalf of importers, who wanted to make the most of the relatively lower levels, dealers said. This limited losses in forward premiums, they said. The one-year dollar/rupee forward premium fell to 1.94% earlier in the day, its lowest level since Jun. 25.

At 1530 IST, the one-year exact period dollar/rupee forward premium was 1.94%, against 1.98% Monday. On an absolute basis, the premium was 166.33 paise, against 170.14 paise Monday.

OUTLOOK

On Wednesday, the rupee will take cues from the movement in the dollar index and crude oil prices, dealers said. Investors will closely watch any tariff related news and developments on the India-US trade policy front, dealers said.  

Dollar sales by exporters, who want to take advantage of the relatively higher dollar/rupee levels, may continue to provide cushion to the Indian unit, dealers said. During the day, the rupee is likely to move in the range of 85.50-86.90 against the dollar. Dealers peg key immediate technical resistance for the rupee at 85.50 against the greenback. 

India Rupee - World FX: Australian dlr up as central bank keeps rates unch

MUMBAI – The Australian dollar rose 0.8% against the greenback after the Reserve Bank of Australia unexpectedly held the benchmark rates unchanged, as opposed to expectations of a cut. The Australian central bank kept the cash rate unchanged at 3.85%, as the majority of members of the rate-setting board agreed to wait for more data to confirm that inflation in the country was slowing down. The central bank said it required "a little more information to confirm that inflation remains on track to reach 2.5% on a sustainable basis." In May, Australia's inflation was 2.1%, the lowest since October.

The euro rose 0.3% against the dollar on optimism about a possible trade deal between the European Union and the US. The European Union spokesperson Olof Gill indicated Monday that a trade deal was closer than ever, as per reports. The European Union aims to seal at least a preliminary trade deal with the US this week. The US announced Monday that it would extend the pause in reciprocal tariffs, which was scheduled to end on Jul. 8, till the end of the month. 

The pound sterling fell 0.1% and the Japanese yen fell 0.2% against the dollar. Japan's Prime Minister Shigeru Ishiba reaffirmed the country's commitment to negotiating a bilateral trade deal with the US, despite Trump's announcement of 25% tariffs on Japanese goods. Ishiba said though no agreement has been reached yet, progress in talks has helped Japan avoid higher tariffs of around 30% or 35%.

US President Donald Trump announced new tariffs on 14 trading partners, including Japan and South Korea. According to letters posted on Trump's social media platform Truth Social, goods exported to the US from these countries will face tariffs ranging from 25% to 40%, effective Aug. 1, sparking concerns about escalating trade tensions between the US and its key allies. After announcing higher levies, Trump said he was still open to additional negotiations and pushed off increased duties until at least Aug. 1.

The dollar index, which measures the strength of the greenback against a basket of six major currencies, was 97.46 at 1615 IST, little changed from 97.52 Monday, and up from 96.97 Friday. The Canadian dollar and the Swiss franc rose 0.2% each against the greenback.  (Sourabh Kumar)

India Rupee: Forward premium near 2-week low on rise in US Treasury yields

NEW DELHI – The one-year dollar/rupee forward premium fell close to a two-week low on overnight rise in US Treasury yields, dealers said. Forwards of a currency pair are reflective of the interest rate differential between two countries.

The 10-year US Treasury yield rose to 4.42% from 4.36% at 1700 IST Monday after the US sent out fresh tariff rates to 14 trading partners but moved the date of implementation to Aug. 1 from Wednesday. Uncertainty on tariffs is likely to continue for the next few weeks, and traders again shifted focus to the concern of expanded US fiscal deficit and a lack of rate cuts by the US Federal Open Market Committee until at least September. 

"It (forward premium) is mostly tracking US yields. There are not a lot of cues in the market," a dealer at a big state-owned bank said. "Market has been clueless since last week. People are just playing on levels."

Some banks stepped in to buy dollars for forward delivery on behalf of importers, who wanted to make the most of the relatively lower levels, dealers said. This limited losses in forward premiums, they said. The one-year dollar/rupee forward premium fell to 1.94% earlier in the day, its lowest level since Jun. 25.

"See, overall premiums should rise in the near term owing to the fundamentals. The rate differential is only going to widen," a dealer at a private-sector bank said. "So, some paying is obviously coming around these levels." With the US Federal Reserve likely to go for a rate cut in September, and no sight of a rate cut by the Reserve Bank of India for the rest of the year, the interest rate differential between the US and India may widen.

At 1430 IST, the one-year exact period dollar/rupee forward premium was 1.95%, against 1.98% Monday. On an absolute basis, the premium was 167.08 paise, against 170.14 paise Monday.  (Pratiksha)

India Rupee: Stays sharply high; volume dull as India-US trade deal awaited

NEW DELHI – The rupee remained sharply higher against the dollar Tuesday on upbeat investor sentiment after US President Donald Trump said the US is close to signing a trade deal with India, dealers said. Trump also pushed back the imposition of reciprocal tariffs to Aug. 1, effectively giving India time to clinch a trade deal, dealers said. 

Washington on Monday imposed new reciprocal tariffs on 14 trading partners, including major players like Japan and South Korea. "Most of the rise (in rupee) is due to the news from US. There is really no other cue," a dealer at a state-owned bank said. "Everybody is just waiting for the trade deal to happen." 

Meanwhile, volume in the currency market remained lacklustre as traders refrained from placing large bets, awaiting clarity on the US-India trade deal. "Market is rangebound. Nobody is taking large positions. People are just booking day-to-day profits and that's about it," a dealer at a private sector bank said. "After yesterday's (Monday's) sharp move (in rupee), nobody really knows what will happen. The market is unpredictable." On Monday, the rupee fell 0.5% against the dollar and settled at a near two-week low of 85.8500 a dollar due to foreign portfolio outflows and a rise in the dollar index. 

After rising Monday, the dollar index remained broadly strong on Tuesday, and Trump unveiled sharply higher US tariffs on goods from Japan, South Korea and other countries. This weighed on the Indian unit, dealers said. At 1350 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 97.26, against 97.52 Monday and 97.13 Thursday. 

Some banks bought the greenback on behalf of importers, who wanted to take advantage of the relatively lower dollar/rupee levels, which limited gains for the Indian currency, dealers said. However, dollar purchases by importers were not aggressive in nature, they said. 

During the day, the rupee is seen moving in a range of 85.50 and 85.90 against the greenback. Dealers peg technical resistance for the rupee at 85.50 a dollar.  (Pratiksha)

India Rupee: Technical levels for rupee - Jul 8

MUMBAI – At 1102 IST, the rupee was at 85.7225 per dollar. At 0900 IST, the rupee was at 85.7500 a dollar, against the previous close of 85.8500. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Gowri Lakshmi)

India Rupee: Up on optimism over India-US trade talk; dollar strength caps gains

MUMBAI – The rupee rose against the dollar Tuesday as investor sentiment remained sanguine about the India-US trade negotiations, dealers said. However, the gains in the Indian unit were capped due to a slight strengthening of the dollar index, after US President Donald Trump announced the latest tariff details, dealers said. 

"Trump has said the Aug. 1 deadline may not be a rigid deadline. There could be more extensions, so market is now optimistic," a currency trader at a brokerage firm said. "Moreover, there was a bit of relief for the rupee as India was left out of the initial list announced yesterday (Monday)." 

Investors are eagerly waiting for the outcome of the ongoing trade negotiations between New Delhi and Washington, with an interim trade deal expected this week. Commerce Minister Piyush Goyal Friday said New Delhi will sign a trade deal only if it is beneficial to both countries. Without a trade deal, export of Indian goods to the US would face a levy of 26%, as per the tariffs announced in April.

Trump Monday hit Japan and South Korea with a 25% tariff, effective Aug. 1. He also sent letters via his social media platform to several countries, including Malaysia, Myanmar, Kazakhstan, Laos and South Africa. The letter outlines tariffs close to those announced earlier in April. Trump later also added that he was open to extensions beyond Aug. 1 if countries made proposals.

At 0948 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 97.26, broadly steady from 97.52 Monday and 97.13 Thursday. The dollar index hit a near two-week high of 97.67 Monday.

During the day, the rupee is seen moving in a range of 85.65 and 85.90 against the greenback. Dealers peg immediate technical resistance for the rupee at 85.65 a dollar.  (Gowri Lakshmi)

India Rupee - Asia FX: Mixed; South Korean won rebounds after falling 1%

MUMBAI – Most Asian currencies were mixed against the dollar Tuesday as investors assessed the latest tariff announcement by US President Donald Trump. Trump on Monday announced 25% tariffs each on Japan and South Korea while also sending letters to other countries, including Malaysia, Laos, Kazakhstan, and South Africa. 

However, investors breathed a sigh of relief as the Trump administration notified that the implementation of the reciprocal tariffs have been extended to Aug. 1 from the previously announced deadline of Jul. 9. The dollar index strengthened slightly and hit a near two-week high Monday after Trump announced the tariffs. He also said he was open to extensions if countries proposed it.

At 0902 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.33, broadly steady from 97.52 Monday and 97.13 Thursday. The dollar index hit a near two-week high of 97.67 Monday. The Japanese yen and South Korean won tumbled 1% against the greenback overnight.

The South Korean won rose 0.9% in early trade on optimism over South Korea-US trade talks. South Korea's finance ministry said Tuesday the government is closely monitoring the impact of the US tariffs on its already sluggish economy and financial markets. The ministry said it would respond quickly and boldly to curb excessive market volatility. 

The Taiwan dollar was flat against the dollar and the Philippine peso was up 0.6% against the greenback. The Indonesian rupiah traded flat. Trump has decided to maintain a 32% tariff on Indonesia, unchanged from the previously announced tariff in April. "Starting from August 1, 2025, we will impose a 32 percent tariff on all Indonesian products shipped to the United States, separate from other Sectoral Tariffs," Trump said in a letter to Indonesia. 

The Chinese yuan rose 0.1% against the greenback. The Malaysian ringgit fell 0.1% against the greenback. Market participants are eyeing the monetary policy meeting by Bank Negara Malaysia due Wednesday. The Malaysian central bank is widely expected to lower its benchmark lending rates for the first time in five years, according to a Reuters poll. The central bank is likely to cut the key interest rates by 25 basis points, bringing the interest rate to 2.75% on Wednesday. 

The Thai baht rose 0.5% against the greenback. Bangkok is set to face a sweeping 36% tariff from the US starting Aug. 1. In a letter posted on Trump's social media handle Truth Social, he specified that Thailand would be imposed with a 36% tariff on "all types of Thai goods, separate from any existing sectoral tariffs." He further added that no tariffs will be collected from Thailand if Thai companies decide to build or produce goods within the US. Thailand has initiated further bilateral talks with the US to mitigate the impact of the sweeping tariffs and to bring the tariff rates down.  (Gowri Lakshmi)

India Rupee: Expected range for rupee - Jul 8

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 Tanima Banerjee

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