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Informist, Monday, Jul. 14, 2025

By Gowri Lakshmi

MUMBAI – The rupee ended at a near three-week low against the dollar even as the Reserve Bank of India actively sold the greenback, dealers said. Banks purchased dollars on behalf of foreign portfolio investors and oil marketing companies, which put the Indian unit under pressure, dealers said. However, exporters' dollar sales and the central bank's intervention prevented the rupee from falling further, dealers said. 

"The RBI was prevalent throughout the day. Even though nothing major happened over the weekend, investors are now in panic and funds are being taken out. And oilers are actively buying (dollars) every other day," a dealer at a private-sector bank said. 

After falling 0.2% against the greenback, the rupee settled at 85.9850 against the dollar, slumping from its previous close of 85.8000. The rupee moved in a relatively narrow range of just over 13 paise during the day. 

Most other Asian currencies also fell against the dollar as investors remained on tenterhooks amid heightened uncertainties over the US tariff policies. Other Asian currencies slipped 0.1-0.3%, with the Philippine peso being the worst hit.

The rupee slumped at the opening and breached the psychologically crucial level of 86-per-dollar. The rupee fell sharply as banks bought dollars on behalf of overseas investors, who withdrew funds from domestic financial markets amid global markets remaining rattled on US President Donald Trump's near-daily tariff announcements, dealers said.

Trump, Saturday announced that he would impose a 30% tariff on imports from the European Union and Mexico, beginnging Aug. 1, even though the bloc and Mexico are actively negotiating about trade and tariff policies with Washington. The European Union said it would extend the suspension of counter-measures to US tariffs until early August and continue trade negotiations for mutually beneficial settlement. 

Further, the increasing concern over the autonomy of US Federal Reserve is also keeping investors on the edge as Trump and his administration continued their criticism about US Fed Chair Jerome Powell and threatening to replace him. White House economic advisor Kevin Hassett said that Trump has the authority to replace Powell for a cause if evidence supports and that the Fed "has a lot to answer for" on renovation cost overruns at its Washington headquarters. "Trump wants his person to be put in the Fed so that rates could be cut faster. It will be a disaster because independence of Fed goes away and dollar index will fall in rapidly if that is the case," a currency trader at a brokerage firm said. 

The dollar index was broadly steady Monday as investors weighed the outlook for inflation in the US and the pace of further rate cuts by the US Federal Reserve remains clouded. At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.86, little changed from 97.87 Friday and 97.58 Thursday. 

Noting the sharp fall in the rupee, exporters began selling dollars, which prevented the rupee from falling further, dealers said. The RBI also actively intervened by selling dollars at 86.00 per dollar and below levels to limit the sharp depreciation in the Indian unit and to curb excessive market volatility. 

However, the rupee came under further pressure, touching a low of 86.0525, its lowest level since Jun. 25, as oil marketing companies purchased dollars in large quantum, fearing a further rise in crude oil prices. Crude prices rose over 2% Friday after the International Energy Agency said the oil market is tighter than it appears while US tariffs and further sanctions on Russia also loomed. It expects global supply to rise by 2.1 million barrels per day this year while world demand will rise by just 700,000 bpd.

At 1530 IST, the September Brent Crude contract on the Intercontinental Exchange was at $71.35 per barrel, a tad up from $70.36 per Friday barrel and up from $68.64 per barrel Thursday. A rise in crude oil prices puts pressure on India's import bill, thereby weighing on the rupee.

FORWARDS

The one-year exact period dollar/rupee forward premium remained steady on Monday as banks purchased forward dollars on behalf of importers, which offset the impact of the rise in the yield of the benchmark 10-year US Treasury note, dealers said. Forwards of a currency pair are the interest rate differential between the two countries.

However, exporters dollar sales for forward delivery, after the rupee breached the psychologically crucial 86-per-dollar mark weighed on the premiums, dealers said. The benchmark 10-year US Treasury yields rose 8 basis points to 4.43% as US President Donald Trump's near-daily tariff announcements continue to rattle global financial markets. 

At 1530 IST, the one-year exact period dollar/rupee forward premium was 169.63, steady from 169.47 Friday and up from 166.97 Thursday. On annualised basis, it was at 1.96%, little changed from 1.97% Friday.

OUTLOOK

On Tuesday, the rupee will take cues from the movement in the dollar index and crude oil prices, dealers said. The rupee is likely to come under pressure as investors may continue to withdraw funds from Indian markets and move to other safe-haven assets, dealers said. Investors will also closely watch any tariff-related news from the US. 

"With (India-US) deal expectations high as the Indian team visits Washington to clinch one, we expect rupee to move between 85.75 to 86.25 tomorrow (Tuesday)," a currency trader at a brokerage firm said. However, should the rupee come under immense pressure, dealers expect RBI's active intervention in the market through dollar sales. Dealers peg key technical support for the Indian unit at 86.10 a dollar. 

India Rupee - World FX: Euro dn 0.1% after Trump threatens 30% tariff on EU

MUMBAI – The euro was down 0.1% against the dollar Monday after US President Donald Trump Saturday threatened the European Union with 30% tariff, starting Aug. 1. In a worsening of the continuing tariff tantrums, Trump announced the latest tariff in a letter to European Commission President Ursula von der Leyen. The European Union has delayed retaliatory tariffs on exports from the US as officials continue trade negotiations with Washington, DC.

"At the same time, we will continue to prepare for the countermeasures, so we're fully prepared. We have always been very clear that we prefer a negotiated solution," von der Leyen said. "This remains the case, and we will use the time that we have now until the 1st of August."

The dollar index was broadly steady as investors continued to weigh the impact of the ongoing tariff uncertainties on inflation outlook and the pace of rate cuts by the US Federal Reserve. At 1508 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.90 against 97.87 Friday and up from 97.58 Thursday.

However, market participants are now worried about the Fed's autonomy after the latest remarks on Chair Jerome Powell by Trump's administration. White House Economic Adviser Kevin Hassett said Trump has the authority to replace Powell for a cause if there is supporting evidence and the Fed "has a lot to answer for" on renovation cost overruns at its Washington headquarters.

The Japanese yen was up 0.1% against the greenback. Japanese households' inflation expectations held steady in the June quarter, a Bank of Japan survey showed Monday, indicating that the country is progressing towards achieving the central bank's 2% inflation target. Over 85% of households in Japan expect prices to rise a year from now, the June survey showed.

The pound sterling fell 0.1% against the US unit after Bank of England Governor Andrew Bailey said the UK central bank is ready to make larger interest rate cuts if the job market shows signs of softening.  "I really do believe the path is downward" on interest rates, Bailey said. "Our big concern is a recession," he added, hinting that a rate cut is "obviously a benefit to all of us".

The Australian dollar fell 0.2% against the greenback and the New Zealand dollar was down 0.3%. However, the fall in these currencies was limited after China's trade surplus widened to $114.77 billion in June, up from $98.94 billion a year ago, beating market expectations of $109.00 billion. Any change in the Chinese economy directly impacts the currencies of Australia and New Zealand due to their close bilateral trade relations.

The Swiss franc was down 0.1% against the greenback after the Swiss Producer and Import Price Index fell 0.1% in June. The index stood at 106.4 points. The Canadian dollar was up 0.1% after Canada's unemployment rate slipped for the first time since January, taking the market by surprise and hinting at a resilient labour market despite the tariff uncertainties. Emoployers added 83,100 jobs in June, logging the biggest increase since December, according to data published Friday. The unemplyment rate fell 0.1% to 6.9%, against the market forecast of 7.1% in a Reuters poll.  (Gowri Lakshmi)

India Rupee: Premiums steady; importers' fwd dlr buys offset rise in US ylds

MUMBAI – The one-year exact period dollar/rupee forward premium remained steady on Monday as banks purchased forward dollars on behalf of importers, which offset the impact of the rise in the yield of the benchmark 10-year US Treasury note, dealers said. Forwards of a currency pair are the interest rate differential between the two countries.

However, exporters dollar sales for forward delivery, after the rupee breached the psychologically crucial 86-per-dollar mark weighed on the premiums, dealers said. "Nothing much is happening in forwards market. Some exporters sold probably because the rupee fell in spot as well," a dealer at a private-sector bank said. 

The Indian unit fell to a near-three-week low in early trade as overseas investors withdrew funds from domestic financial markets due to heightened uncertainty about US tariff policies, dealers said. "It is range bound, oil companies are paying and exporters are receiving," another currency trader at a brokerage firm said. "Receiving should come (more) if spot falls further." 

The benchmark 10-year US Treasury yields rose 8 basis points to 4.43% as US President Donald Trump's near-daily tariff announcements continue to rattle global financial markets. The uncertainty about the tariff policies also clouds the outlook for inflation and pace of further rate cuts by US Federal Reserve. In the latest development in the tariff front, US has threatened to impose 30% import duty on the European Union and Mexico amid on-going bilateral trade negotiations. 

At 1337 IST, the one-year exact period dollar/rupee forward premium was 169.63, steady from 169.47 Friday and up from 166.97 Thursday. On annualised basis, it was at 1.96%, little changed from 1.97% Friday.  (Gowri Lakshmi)

India Rupee: Sharply down as FPIs, oil cos' buy dollars; RBI dlr sales limit fall

MUMBAI – The rupee was near a three-week low as foreign portfolio investors and oil marketing companies persistently bought dollars, dealers said. However, a few public sector banks sold the greenback, on behalf of the Reserve Bank of India, at 86.0300 a dollar, which prevented the rupee from falling further, dealers said.

The rupee opened sharply lower as banks purchased dollars for overseas, who withdrew funds from domestic financial markets and moved to other safe-haven assets amid a rapidly changing global landscape and heightened uncertainty about US tariff policies, dealers said. At 1122 IST, the benchmark stock indices, the Nifty 50 and BSE Sensex, were down 0.4% each.

Oil marketing companies also purchased dollars in a large quantum as crude oil prices rose over 2% Friday. Oil prices rose after International Energy Agency said the global oil market outlook may be tighter than expected. At 1124 IST, the September Brent Crude contract on the Intercontinental Exchange was at $70.50 per barrel against $70.36 per barrel Friday and up from $68.64 per barrel. 

However, the rupee's fall was limited as public sector banks sold dollars at the day's low, dealers said. "Exporters rushed in the morning itself and then nats (nationalised banks) also sold dollars at 86.00 and below levels," a currency trader at a brokerage firm said. The rupee hit a low of 86.0300 a dollar in early trade, its lowest level since Jun. 25. The Indian unit has moved 11 paise against the dollar so far this session.

For the rest of the day, the rupee is seen moving in a range of 85.85 and 86.10 against the greenback. Dealers peg key technical support for the Indian unit at 86.10 a dollar.  (Gowri Lakshmi)

India Rupee: Technical levels for rupee - Jul 14

MUMBAI – At 1056 IST, the rupee was at 85.9650 per dollar. At 0900 IST, the rupee was at 86.0000 a dollar, against the previous close of 85.8000. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Gowri Lakshmi)

India Rupee - Asia FX: Most down; low risk appetite hit on US tariff fears

Most Asian currencies traded lower against the dollar Monday as investor sentiment remain jittery amid rising worries about the US tariff policies. On Saturday, US President Donald Trump said he would impose a 30% tariff on the European Union and Mexico, beginning Aug. 1. Trump's announcement comes amid the ongoing bilateral talks of the bloc and Mexico with Washington.

Meanwhile, White House economic advisor Kevin Hassett said that US President Donald Trump has the authority to replace Federal Reserve Chair Jerome Powell for a cause if evidence supports and that the Fed "has a lot to answer for" on renovation cost overruns at its Washington headquarters. Hassett's comments hint that the Trump administration is actively looking to replace Powell before his term ends as the Fed chief in May 2026. 

The dollar index was little changed in early trade and did not sharply react to any of the news. At 0950 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.95 against 97.87 Friday and up from 97.58 Thursday. The Philippine peso was down 0.3% and the Indonesian rupiah was down 0.2%. 

The Malaysian ringgit was down 0.1% and the offshore Chinese yuan traded flat against the greenback. The South Korean won fell 0.2% against the US unit. South Korea's top trade negotiator said Monday Seoul would be able to strike an "in-principle" trade deal with Washington by the Aug. 1 deadline and voiced that the time is short to work out a detailed negotiation seeking to avert the US reciprocal tariffs completely. 

"I believe it's possible to reach an agreement in principle in the US tariff negotiations, and then take some time to negotiate further," Minister for Trade Yeo Han-Koo said. "Twenty days are not enough to come up with a perfect treaty that contains every detail."

The Taiwan dollar was down 0.1% against the greenback. The Thai baht was flat against the US dollar. Thailand is mulling over a possibility to offer zero tariffs on more US imports, the Thai finance minister said Monday. The government is also planning a $6.1 billion worth of soft loans to ease the impact of the tariffs, Finance Minister Pichai Chunhavajira said. Thailand faces a 36% tariff from Washington.  (Gowri Lakshmi)

India Rupee: Breaches 86/$ on FPI outflows; dollar sales by exporters limit fall

MUMBAI – The rupee slumped and breached the psychologically crucial 86-per-dollar mark against the greenback Monday as banks purchased the dollar on behalf of foreign portfolio investors amid rising uncertainty around US tariff policies, dealers said. However, dollar sales by a few exporters limited further fall of the rupee, dealers said. 

"Panic button amongst investors has been hit, there are fund outflows," a dealer at a private sector bank said. At 0929 IST, the benchmark indices, the Nifty 50 and the BSE Sensex were down 0.4% and 0.3%, respectively. Investors remain on tenterhooks as the US tariff war intensified last week, beginning with a 25% tariff slapped on Japan and South Korea along with tariff threats on copper, semiconductors and pharmacueticals. 

US President Donald Trump Saturday said he would impose a 30% tariff on most imports from the EU and Mexico, starting Aug. 1, even though the countries are in engaging in bilteral trade talks, trying to avert or reduce the reciprocal tariffs. The European Union said it would extend the suspension of counter-measures to US tariffs until early August and continue trade negotiations for mutually beneficial settlement. 

Noting the slump in the rupee, exporters rushed to sell dollars to take advantage of the relatively higher dollar/rupee levels, dealers said. This limited further fall of the rupee and brought the dollar/rupee level to 85.9550. Some dealers also speculate that the Reserve Bank of India sold dollars, which prevented excessive volatiltiy and limited the losses for the Indian unit. 

During the day, the rupee is seen moving in a range of 85.80 to 86.10 against the greenback. Dealers peg key technical support for the rupee at 86.10 a dollar.  (Gowri Lakshmi)

India Rupee: Expected range for rupee - Jul 14

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)

End

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

Edited by Akul Nishant Akhoury

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