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Informist, Friday, Jul. 11, 2025

By Pratiksha

NEW DELHI – The rupee ended sharply lower against the dollar Friday due to a rise in the dollar index after US President Donald Trump's latest tariff plans threatened to further disrupt the global trade landscape, dealers said. Banks' greenback purchases on behalf of foreign porfolio investors and importers also weighed on the Indian currency, they said.

"Tariff announcements everyday from Trump have definitely spooked the market. Maybe not too much, but more decisions will only dampen the risk sentiment more," a dealer at a state-owned bank said. "Outflows coupled with dollar strength pushed it (rupee) lower today." However, dollar sales by banks on behalf of some exporters, helped erase some of the losses for the Indian unit, they said. 

The rupee settled at 85.8000 a dollar on Friday, depreciating 0.2% against the dollar. It had settled at 85.6350 on Thursday.

Other emerging market peers traded on a mixed note Friday, with the Indian unit coming out as the worst performer in the pack. The rupee depreciated 0.5% against the dollar this week. 

The Indian currency started the day on a weak note as Trump on Thursday announced a 35% tariff on Canadian imports, starting Aug. 1, and said he plans to impose blanket tariffs of 15% or 20% on most other trading partners, which will be higher than the current 10% baseline rate. 

Trump had pushed back his reciprocal tariff deadline of Jul. 9 to Aug. 1 for many countries earlier this week, to allow more time for negotiations. However, he escalated the trade war by coming up with new tariff rates for a number of countries, including Japan and South Korea, along with a 50% tariff on copper. At 1530 IST, the dollar index, which measures the strength in the dollar against a basket of six major currencies, was at 97.80, against 97.58 Thursday and 97.47 Wednesday.

With Trump's latest barrage of tariffs on countries, market participants have turned cautious, with most awaiting further developments on the India-US trade deal. "The rise in tariffs by the US on Brazil and Canada has added uncertainty, and markets will remain cautious until constructive trade talks emerge," Jateen Trivedi, VP research analyst - commodity and currency at LKP Securities, said in a note. 

Further, banks bought the US unit on behalf of FPIs looking to pull out funds from Indian markets, as risk appetite took a beating amid Trump's latest tariff announcements, dealers said. This also weighed on the local unit. On Friday, both the Sensex and Nifty 50 ended 0.8% lower each. 

"We may continue to see outflows if there is no clarity on the (India-US) trade deal soon," a dealer at a foreign bank said. "I see rupee easily testing below 86 levels in coming days in current conditions."

Further, banks also bought the greenback on behalf of oil marketing companies and other importers, who fear a further depreciation in the local currency in the coming days. The Indian unit hit a low of 85.9050 a dollar during the day. 

However, during the last leg of trade, some banks stepped in to sell dollars on behalf of exporters, who wanted to take advantage of the relatively higher dollar/rupee levels, dealers said. This led to the rupee erasing almost 10 paise of losses. Earlier in the day, the Indian unit was also supported by some big state-owned banks' dollar sales ahead of daily reference rate fixing, dealers said. 

A rise in the Chinese yuan also aided the Indian unit, dealers said. The yuan rose 0.1% against the dollar despite the dollar index strengthening, due to a stronger-than-expected mid-point fix by the country's central bank.

FORWARDS

The dollar/rupee forward premium, especially the near-term tenures, ended higher Friday as the Reserve Bank of India drained out INR 1.52 trillion worth of liquidity from the banking system through its seven-day variable rate reverse repo auction, conducted earlier in the day, dealers said.

"The frequency and the quantum of the VRRR auctions announced by the RBI has definitely pushed the premiums higher. We are still seeing strong support at 2%," a dealer at a private-sector bank said. 

The RBI on Friday conducted a seven-day variable rate reverse repo auction for a notified amount of INR 2.50 trillion, which received an underwhelming response, as banks only offered to park INR 1.52 trillion with the central bank. However, the rise in premiums was limited as a slump in the rupee in the domestic spot market prompted some exporters to sell dollars for forward delivery, dealers said. 

At 1530 IST, the one-year exact period dollar/rupee forward premium was 1.97%, against 1.95% Thursday. On an absolute basis, the premium was 169.47 paise, against 166.97 paise at the previous close.

OUTLOOK

On Monday, the rupee will take cues from the movement in the dollar index, dealers said. Market participants will closely monitor developments related to the India-US trade deal and other US tariff related news. The local unit may also take cues from movement in crude oil prices, they said. 

"If there is no new news on the trade deal over the weekend, rupee will continue to see range bound moves between 85.50 to 86.00," another dealet at a state-owned bank said. 

Amid the ongoing uncertainty on the India-US trade deal front, dealers expect FPIs to continue to buy dollars to withdraw funds from the domestic market, weighing on the local currency. If the rupee convincingly falls below 86-per-dollar, dealers expect the Reserve Bank of India to step in through dollar sales and curb a sharp fall.

During the day, the rupee is likely to move in the range of 85.50-86.00 against the dollar. Dealers peg immediate technical support for the rupee at 86.00 against the greenback. 

India Rupee - World FX:Dollar index up; Canadian dlr slumps on new US tariff

NEW DELHI – The dollar index rose after US President Donald Trump on Thursday announed a new set of import tariffs, potentially further disrupting the global trade landscape. Trump announced a 35% tariff on Canadian imports, starting Aug. 1, and said he plans to impose blanket tariffs of 15% or 20% on most other trading partners, which will be higher than the current 10% baseline rate. 

Trump had pushed back his reciprocal tariff deadline of Jul. 9 to Aug. 1 for many countries earlier this week, to allow more time for negotiations. However, he stepped up the trade war by coming up with new tariff rates for a number of countries, including Japan and South Korea, along with a 50% tariff on copper.

At 1510 IST, the dollar index, which measures the strength in the dollar against a basket of six major currencies, was at 97.84, against 97.58 Thursday and 97.47 Wednesday. The Canadian dollar fell 0.4% against the dollar as Trump unveiled 35% tariff rate on the country's imports.    

The euro and the pound sterling declined 0.2% and 0.3%, respectively, owing to a strong dollar. Meanwhile, Trump on Thursday also said the European Union could receive a letter on tariff rates by Friday, putting into question the progress of trade talks between the US and the bloc. Further, European Central Bank board member Isabel Schnabel said in an interview on Friday that the bar for another rate cut by the central bank is "very high" as the economy is holding up better than expected despite uncertainty over trade. 

The pound sterling also fell as data released on Friday showed the UK's economy contracted unexpectedly for a second consecutive month in May. UK GDP growth declined 0.1% in May after a 0.3% fall in April.

Both the Australian dollar and the New Zealand dollar fell 0.2% and 0.4%, respectively, tracking a rise in the dollar index. A survey showed Friday that manufacturing activity in New Zealand slightly rose in June but still remained in contraction as businesses continue to deal with weak consumer demand, weighing on the currency. (Pratiksha)

India Rupee: Fwd premiums rise as RBI drains INR-1.5-tln-liquidity via VRRR

MUMBAI – The one-year dollar/rupee forward premium rose as the Reserve Bank of India drained out INR 1.52 trillion worth of liquidity from the banking system through its seven-day variable rate reverse repo auction, conducted earlier in the day, dealers said.

"Forwards are up because of the (VRRR) auction today (Friday). US Treasury yield is unchanged. Uncertainty also prevails about the India-US trade deal now that 500% tariff (on Russian oil buyers) is also taking the limelight," a currency trader at a brokerage firm said. 

The RBI on Friday conducted a seven-day variable rate reverse repo auction for a notified amount of INR 2.50 trillion, which received underwhelming response, as banks only offered to park INR 1.52 trillion with the central bank. 

However, the rise in premiums was limited as a slump in the rupee in the domestic spot market prompted exporters to sell dollars for forward delivery, dealers said. The rupee fell sharply to a low of 85.9050 a dollar on Friday. 

Market participants continue to assess the ongoing tariff uncertainty as investor sentiments turned jittery after US President Donald Trump began announcing higher-than-expected tariffs on its trading partners. Trump Thursday announced a 35% tariff on its largest trading partner Canada. Trump also said he backs the new Russia sanctions bill, which proposed a 500% tariff on countries that purchase Russian energy products, which may pose a hurdle for the India-US bilateral trade deal, according to media reports.

The 10-year benchmark US Treasury yield was little changed at 4.35% Thursday from 4.34% Wednesday even as the latest initial jobless claims data showed a stronger-than-expected US labour market. Data showed that the number of Americans filing unemployment benefits for the week ended Saturday dropped by 5,000 to a seasonally adjusted 227,000, logging the fourth consecutive week of falling unemployment benefit claims. Economists had forecast 235,000 claims for last week in a Reuters poll.

The better-than-expected jobs data hinted at a strong US labour market, creating room for the US Federal Reserve to hold the federal funds target rate steady at its upcoming meeting later this month. Forwards of a currency pair are reflective of the interest rate differential between the two countries.

At 1500 IST, the one-year exact period dollar/rupee forward premium was 1.97%, against 1.95% Thursday. On an absolute basis, the premium was 169.35 paise, against 166.97 paise at the previous close. (Gowri Lakshmi)

 India Rupee: Remains sharply down on dollar purchases by importers, FPIs

MUMBAI – The rupee remained sharply down against the dollar Friday as banks persistently bought the greenback on behalf of importers and foreign portfolio investors, dealers said. "Importers' buying came in when rupee hit 85.85...," a dealer at a private-sector bank said. "FPIs were active since the morning anyways, I think this will now continue for a while." 

The rupee came under pressure and hit a low of 85.89 a dollar as importers purchased the greenback, fearing a further fall in the rupee, dealers said. Banks also purchased dollars for overseas investors, who withdrew funds from domestic financial markets as their sentiment turns jittery due to heightened uncertainty about US tariffs, dealers said. At 1303 IST, the benchmark stock indices, the Nifty 50 and the BSE Sensex, were down 0.8% each.

Global financial markets remained rattled as US President Donlad Trump began announcing higher-than-expected tariffs on several trading parteners and threatened to increase and impose more tariffs if retaliated. Earlier this week, Trump announced a 25% tariff on Japan and South Korea and threatened to impose tariff duties on copper, pharmaceuticals and semiconductors. 

The latest turn in the tariff-front is Trump's announcement of a 35% tariff on its largest trading partner Canada. Trump Thursday raised Canada's tariff from the current 25%, amid on-going bilateral trade talks with Ottawa. Trump also announced a blanket tariff of 15-20% on most other trading partners.

The rupee was also weighed down by a slight rise in the dollar index, dealers said. The dollar also strengthened after the US initial jobless claims data for week ended Saturday showed a decline in the number of Americans filing for unemployment benefits, indicating a strong US labour market. At 1310 IST, the dollar index, which measures the strength in the dollar against a basket of six major currencies, was at 97.72, slightly up from 97.58 Thursday and 97.47 Wednesday.

Investors continued to weigh Trump's threat of a 10% tariff on BRICS member states, a grouping which India is a part of. He also voiced that he backs the new Russia sanctions bill, which proposed a 500% tariff on countries that purchase Russian energy products, which may pose a hurdle for India-US bilateral trade deal, according to media reports.

However, a further fall in the rupee was limited as traders sold dollars at the daily referece-rate fixing window, dealers said. "Some good selling was seen at 85.88 (a dollar), but I guess the rupee will come back to 85.85 soon," the dealer said. 

For the rest of the day, the rupee is seen moving in a range of 85.70 to 85.95 a dollar. Dealers peg key technical support for the Indian unit at 85.95 against the greenback.  (Gowri Lakshmi)

India Rupee - Asia FX: Mixed as mkt assesses latest US tariff announcements

MUMBAI - Asian currencies traded on a mixed note Friday as market participants assess the latest US tariff announcements. US President Donald Trump Thursday announced raising tariffs on Canada to 35% from the current 25%. 1 amid the ongoing trade talks between Ottawa and Washington. In a letter posted on his social media handle Truth Social, Trump told Canadian Prime Minister Mark Carney the new tariffs would come into effect on Aug. 1 and threatened to impose higher tariffs if Ottawa retaliated.

"If Canada works with me to stop the flow of Fentanyl, we will, perhaps, consider an adjustment to this letter," Trump wrote. In his letter, the president voiced against the flow of fentanyl from Canada and that the country's tariff and non-tariff barriers were hurting US diary farmers and the trade deficit between the two countries were posing a threat to the US economy and national security. Trump also said he plans to implement blanket tariffs of 15% or 20% on most other trading partners.

The dollar also got a boost after the initial jobless claims data for the week ended Saturday showed an unexpected fall to a seven-week low, hinting at a strong US labour market and creating room for the US Federal Reserve to hold the federal funds rate target steady at its upcoming meeting later this month. 

The jobs data published Thursday showed unemployment benefits claims fell by 5,000 to a seasonally adjusted 227,000. This is the fourth consecutive week of fall in unemployment benefits claims. In a Reuters poll, economists had forecast 235,000 claims for last week. At 1034 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.85, slightly up from 97.58 Thursday and 97.47 Wednesday.

The Taiwan dollar traded flat against the greenback. The South Korean won was down 0.2% against the greenback and the Chinese yuan was down 0.1%. The Malaysian ringgit fell 0.3%. The Thai baht rose 0.2% against the greenback. 

The Indonesian rupiah was flat against the greenback. Indonesia and the US have now agreed to seek concrete steps to advance the ongoing trade negotiations in a move to deepen the bilateral trade relationship and to avert or reduce reciprocal tariffs.

"Indonesia and the US share a common understanding of the ongoing negotiation progress. In the next three weeks, we aim to intensify our discussions to achieve mutually beneficial outcomes," Indonesia's top negotiator and Coordinating Economy Minister Airlangga Hartarto said. 

The Philippine peso was also flat against the US unit. The Philippine government is currenlty mulling over the impact of the higher-than-expected 20% reciprocal tariff, starting next month. Trump raised the tariffs to 20% from 17% announced earlier in April. "We remain committed to continuing negotiations with the United States in good faith to pursue a bilateral comprehensive economic agreement or, if possible, an FTA (free trade agreement)," Special Assistant to the President for Investment and Economic Affairs of the Philippines, Frederick D. Go, said.  (Gowri Lakshmi)

India Rupee: Technical levels for rupee - Jul 11

MUMBAI – At 1057 IST, the rupee was at 85.8400 per dollar. At 0900 IST, the rupee was at 85.8250 a dollar, against the previous close of 85.6350. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Gowri Lakshmi)

India Rupee: Slumps on FPI outflows, stronger dlr amid rising tariff worries

MUMBAI – The rupee slumped against the dollar Friday as banks purchased dollars on behalf of foreign portfolio investors, who withdrew funds from domestic financial markets and moved to other safe-haven assets, dealers said. The rupee was also weighed down as the dollar index strengthened slightly amid heightened worries over US tariff policies and uncertainties around it, dealers said.

"Rupee is reacting to the Canada tariffs," a dealer at a private sector bank said. "FPIs are pulling out funds from India. Rupee will likely test 86 today and 85.95 is a sure shot."

US President Donald Trump Thursday announced a 35% tariff on its largest trading partner Canada despite Ottawa seeking bilateral trade talks with Washington. Trump raised the current 25% tariff to 35%, effective Aug. 1, and threatened to increase the duties more if Canada retaliates.

In a letter to Canada posted on social media platform Truth Social, Trump raised concerns over the flow of fentanyl from Canada and the country's tariff and non-tariff barriers hurting the US economy and national security. "If Canada works with me to stop the flow of Fentanyl, we will, perhaps, consider an adjustment to this letter," Trump wrote.

Trump also announced a blanket tariff of 15-20% on most other trading partners. Amid heightened risk sensitivity and the world on the brink of a full-fledged tariff and trade war, investors remain on tenterhooks. At 0929 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.86, slightly up from 97.58 Thursday and 97.47 Wednesday.

The dollar also strengthened after the US initial jobless claims data for week ended Saturday showed a decline in the number of Americans filing for unemployment benefits, indicating a strong US labour market. The jobs data published Thursday showed unemployment benefits claims fell by 5,000 to a seasonally adjusted 227,000. This is the fourth consecutive week of fall in unemployment benefits claims. In a Reuters poll, economists had forecast 235,000 claims for last week.

Dealers expect the rupee to remain under pressure during the day. Should the rupee inch toward the psychologically crucial level of 86 per dollar, dealers expect the Reserve Bank of India to sell dollars to limit the rupee's fall. Dealers also expect exporters to sell the greenback at 85.95 a dollar to take advantage of the lucrative level. This may also prevent the rupee from falling sharply, dealers said.

During the day, the rupee is seen moving in a range of 85.70 to 86.00 against the greenback. Dealers peg immediate technical support for the Indian unit at 86.00 a dollar.  (Gowri Lakshmi)

India Rupee: Expected range for rupee - Jul 11

MUMBAI – Following are the expected support and resistance levels for the rupee on Thursday, 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 Vandana Hingorani

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