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Informist, Wednesday, Jul. 16, 2025

By Sourabh Kumar

MUMBAI – The rupee ended the day lower against the dollar as the dollar index hit its highest level in over three weeks after the release of US CPI data Tuesday, dealers said. Importers also purchased dollars in anticipation of the rupee falling more, which weighed on the Indian currency, dealers said. Some foreign banks sold dollars for foreign fund inflows into Indian companies, which limited the rupee's fall, they said.

After moving in a range of 31 paise, the most in over a week, the rupee settled at 85.94 a dollar Wednesday. The Indian currency had closed at 85.8100 a dollar Tuesday. "The dollar demand was there the whole day because of strength in the dollar index," a dealer with a foreign bank said. "People are trying to go long now as they think the index may rise further."

The rupee started the day sharply lower against the greenback owing to the strong dollar index. The index, which measures the strength of the greenback against a basket of six major currencies, was at 98.56 at 1530 IST, close to the level of 98.70 that it hit late Tuesday after the release of US CPI figures.

Data released Tuesday showed the US CPI rose 0.3% on month in June, rising the highest since January. It was up from May's rise of 0.1%. This is seen by economists as the start of rising consumer prices due to US President Donald Trump's volatile trade policies. The US CPI rose 2.7% on an annual basis after rising 2.4% in May. Economists polled by Reuters had forecast the CPI would climb 0.3% on month and 2.6% on year.

The dollar also strengthened after Boston Federal Reserve President Susan Collins said she is not eager to cut the US central bank's key interest rate because of existing economic ambiguity. She noted that data indicate import tariffs will raise inflation, but the total effect might not be as severe as previously thought.

However, the rise in the dollar index was limited as US Treasury Secretary Scott Bessent said in a Bloomberg Surveillance interview Tuesday that a "formal process" was being initiated to find a possible successor to US Federal Reserve Chair Jerome Powell. "There are a lot of great candidates, and we'll see how rapidly it progresses," Bessent said.

Adding to the pressure from a strong dollar, importers also purchased the greenback. Their dollar purchases pushed the rupee down to 86.04 a dollar within an hour of trade. However, the rupee recovered as some foreign banks and a few major state-owned banks sold the greenback.

While some dealers speculated that state-owned banks sold dollars in early trade on behalf of the Reserve Bank of India, which wanted to limit the rupee's fall, others said state-owned banks' dollar sales were majorly for their clients. Some foreign banks were said to have sold dollars on behalf of overseas clients seeking to invest in Indian companies. A few dealers also said foreign banks' dollar sales were related to overseas inflows into the State Bank of India's qualified institutional placement worth INR 250.00 billion. Reports suggested the QIP opened Wednesday.

"The selling was mostly by foreign banks today, most of them European banks," a dealer with another foreign bank said. "While some was for the QIP, there were also other custodian flows." Apart from this, a few foreign banks sold dollars for foreign fund inflows into the domestic debt market, dealers said.

FORWARDS

The one-year exact period dollar/rupee forward premium fell Wednesday following the overnight rise in the 10-year benchmark US Treasury yield after data showed US consumer prices increased the most in five months in June, dampening expectations of a rate cut by the US Federal Reserve, dealers said. 

The yield on the 10-year benchmark US Treasury note rose to 4.50% Tuesday, from 4.43% Monday. Forwards of a currency pair are reflective of the interest rate differential between two countries. Fed fund futures now reflect a 52.6% probability of the Fed holding rates in September.

At 1530 IST, the one-year exact period dollar/rupee forward premium was 168.91, against 169.65 Tuesday and 169.13 Monday. On an annualised basis, it was at 1.95%, down from 1.98% Tuesday and 1.97% Monday.

OUTLOOK

Thursday, the rupee will take cues from movement in the dollar index and crude oil prices, dealers said. The rupee may come under pressure if the dollar index remains strong. Importers may keep purchasing dollars in anticipation of the rupee falling further, which could weigh on the rupee.

Dealers said the rupee may fall sustainably below 86 a dollar Thursday in case of a lack of robust foreign fund inflows. However, some dealers said the RBI might intervene in the currency market to support the rupee. Any tariff-related news will be closely watched by market participants. 

Participants also await the release of the US June Producer Price Index, due later in the day. US Federal Reserve Bank of Cleveland President Beth Hammack is scheduled to speak later in the day, which would also be watched for its impact on the dollar index. 

During the day, the rupee is seen moving in a range of 85.70-86.25 against the greenback. Dealers peg key technical resistance for the rupee at 85.10 a dollar. 

India Rupee - World FX: Pound sterling up after CPI rises to over 1-yr high

NEW DELHI – The pound sterling edged up 0.1% against the dollar after inflation in the UK unexpectedly rose to 3.6% in June, marking its highest rate in over a year and slightly dampening expectations of imminent interest rate cuts by the Bank of England. Data released Wednesday showed that inflation climbed from 3.4% in May, remaining well above the central bank's 2.0% medium-term target. A Reuters poll saw inflation remaining unchanged last month. 

The Bank of England has cut interest rates by a total of 100 basis points since August, and economists' poll by Reuters last month forecast two more quarter-point rate cuts this year, including a likely move in August. The central bank had kept rates unchanged at 4.25% in June. Meanwhile, US President Donald Trump said on Tuesday he plans to meet UK Prime Minister Keir Starmer in Scotland later this month to refine a US-UK trade deal.

The dollar index edged slightly lower in European trade after rising on Tuesday. The index had jumped to an over three-week high after data on Tuesday showed that US consumer prices increased by the most in five months in June, prompting market participants to scale back bets of a rate cut by the US Federal Reserve.

US inflation increased 0.3% on month in June after rising 0.1% in the previous month, gaining the most since January. In the 12 months through June, the CPI advanced 2.7% after rising 2.4% in May. Economists polled by Reuters had forecast inflation to climb 0.3% on month and 2.6% on a year-on-year basis. At 1510 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 98.52, against 98.64 Tuesday and 98.10 Monday. The index had hit a high of 98.70 Tuesday, its highest level since Jun. 23.

The euro rose 0.2% against the dollar, tracking a fall in the dollar index. The Australian dollar was up 0.1% against the dollar while the New Zealand dollar was down 0.1%. Market participants now await the US producer price data, due later in the day, for further cues on Fed's rate trajectory.  (Pratiksha) 

India Rupee: Fwd premium falls as US ylds jump after Jun CPI inflation rises5

NEW DELHI – The one-year dollar/rupee forward premium fell Wednesday due to an overnight rise in the 10-year benchmark US Treasury yield after data showed US consumer prices increased the most in five months in June, dampening expectations of a rate cut by the US Federal Reserve, dealers said. 

"Forwards are mostly tracking US yields. The one-year (forward premium) is stuck in a range of late, and seems like 2.10% will continue to be a good resistance," a dealer at a foreign bank said. 

The yield on the benchmark US 10-year Treasury note rose to 4.50% Tuesday, from 4.43% on Monday. Forwards of a currency pair are reflective of the interest rate differential between two countries. US inflation increased 0.3% on month in June after rising 0.1% in the previous month, gaining the most since January. In the 12 months through June, the CPI advanced 2.7% after rising 2.4% in May. Economists polled by Reuters had forecast inflation to climb 0.3% on month and 2.6% on a year-on-year basis.

Fed fund futures now reflect a 46% probability of the Federal Reserve holding rates in September, up from 37% a day ago. Odds of a rate cut at the upcoming Jul. 29-30 meeting are now below 5%, according to the latest CME Fedwatch tool. Market participants now keenly await the US producer price index data, due later in the day, for cues on the Fed's rate trajectory. 

Market participants see strong technical support for the one-year dollar/rupee forward premium at 2.10% and resistance at 1.90%. At 1250 IST, the one-year exact period dollar/rupee forward premium was 1.96%, against 1.98% Tuesday. On an absolute basis, the premium was 168.81 paise, against 169.65 paise at the previous close.  (Pratiksha)

India Rupee: Slightly up; erases all losses on dollars sales for FX inflows

NEW DELHI – The rupee erased all of its early losses and rose slightly against the dollar as banks sold dollars for foreign fund inflows, dealers said. The rupee had hit a low of 86.0400 a dollar earlier in the day. "There was major selling (of dollars) for inflows. If not for that, we could not have seen such a sharp reversal (in the rupee)," a dealer at a private-sector bank said. 

Some dealers said the inflows were likely on account of State Bank of India's qualified institutional placement worth INR 250 billion. SBI is likely to launch INR 250 billion worth of qualified institutional placement as early as Wednesday, CNBC-TV18 reported Wednesday citing sources.

Banks also sold dollars for foreign portfolio inflows, likely into the debt market, which aided the rupee, according to some dealers. Further, some dealers speculated that the Reserve Bank of India may have intervened through dollar sales around 86.04 a dollar in early trade, which helped the rupee erase some losses. "The move below 86 (a dollar) did not sustain for long after opening. It looks like they (RBI) don't want these levels right now," a dealer at a foreign bank said. 

The rupee fell sharply in early trade as the dollar index hit an over-three-week high on Tuesday after data showed that US consumer prices increased by the most in five months in June, prompting market participants to scale back bets of a rate cut by the US Federal Reserve. At 1135 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 98.52, against 98.64 Tuesday and 98.10 Monday. The index had hit a high of 98.70 Tuesday, its highest level since Jun. 23.

For the rest of the day, the rupee is seen moving in a range of 85.70 and 86.00 a dollar. Dealers have pegged immediate technical resistance for the Indian unit at 85.70 a dollar.  (Pratiksha)

India Rupee: Technical levels for rupee - Jul 16

NEW DELHI – At 1025 IST, the rupee was at 85.8225 per dollar. At 0900 IST, the rupee was at 85.9750 a dollar, against the previous close of 85.8100. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Pratiksha)

India Rupee - Asia FX: Most fall as dlr index hits 3-wk high post US Jun CPI

NEW DELHI – Most Asian currencies fell against the dollar Wednesday as the dollar index hit an over three-week high Tuesday after data showed that US consumer prices increased by the most in five months in June. However, losses in the emerging market units were limited owing to a rise in Asian equities. 

US inflation increased 0.3% last month after rising 0.1% in May, gaining the most since January. In the 12 months through June, the CPI advanced 2.7% after rising 2.4% in May. Economists polled by Reuters had forecast inflation to climb 0.3% on month and 2.6% on a year-on-year basis.

The inflation data led to market participants scaling back bets of a rate cut by the US Federal Reserve. Fed fund futures now reflect a 44% probability of the Fed holding rates in September, up from 37% a day ago. Odds of a rate cut at the upcoming Jul. 29-30 meeting are now below 5%, according to the latest CME Fedwatch tool.

Meanwhile, Federal Reserve Bank of Boston President Susan Collins Tuesday warned that she continues to expect the rise in import taxes to push up inflation while pushing down growth and employment. However, she added that strong balance sheets on both the business and household sides may help absorb the hit and lessen its impact.

At 0950 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.60, against 98.64 Tuesday and 98.10 Monday. The index had hit a high of 98.70 Tuesday, its highest level since Jun. 23. 

The Philippine peso was the worst hit among its peers with a fall of 0.6% against the dollar. Data on Tuesday showed remittances to Phillipines posted a slower growth in May amid slowdown in the global economy on the back of US President Donald Trump's tariffs against US trading partners. 

The Malaysian ringgit and the Taiwan dollar fell 0.3% against the dollar each. Malaysia's Investment, Trade and Industry Minister Zafrul Aziz said Tuesday he expects trade to grow by 4-5% this year despite global economic uncertainties and the threat of tariffs weighing on its economic outlook.

The Indonesian rupiah was down 0.1% against the dollar after Trump on Tuesday said the US would impose a 19% tariff on goods from Indonesia under a new agreement with the Southeast Asian nation. Bucking the trend, the Thai baht was up 0.1% against the greenback. According to reports, Thailand Finance Minister Pichai Chunhavajira will propose to the cabinet state-owned bank head Vitai Ratanakorn as his choice for the next central bank governor next week.  (Pratiksha) 

India Rupee: Sharply down as dlr index hits 3-wk high after US Jun CPI rises

NEW DELHI – The rupee fell sharply against the dollar Wednesday as the dollar index hit an over three-week-high after US retail inflation for June rose, likely on the back of tariffs, dealers said. The economic data indicator led to market participants paring bets of a rate cut by the US Federal Reserve.

"Rupee is tracking the US data, but the moves are still in the daily range. We need to see if any key levels break Wednesday. 86.10 seems like the resistance for the day," a dealer at a private-sector bank said.

US inflation increased 0.3% on month in June after rising 0.1% the previous month, gaining the most since January, data from the Labour Department showed Tuesday. In the 12 months through June, US CPI advanced 2.7% after rising 2.4% in May. Economists polled by Reuters had forecast inflation to climb 0.3% on month and rise 2.6% on a year-over-year basis.

Fed fund futures now reflect a 44% probability of the US Fed holding rates in September, up from 37% a day ago. Odds of a rate cut at the upcoming Jul. 29-30 meeting are now below 5%, according to CME Fedwatch. At 0930 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 98.61, against 98.64 Tuesday and 98.10 Monday. The index had hit a high of 98.70 Tuesday, its highest level since Jun. 23.

Meanwhile, some banks stepped in to sell dollars, likely on behalf of exporters, looking to take advantage of the relatively higher dollar/rupee levels, which limited losses for the Indian unit, dealers said. "Yesterday (Tuesday), RBI had likely come (through dollar sales) in small amounts, but today they have let it (the rupee) go past 86 easily, so I am not sure what levels they may come around now," a dealer at a state-owned bank said. "But we are seeing some interest from exporters around these (rupee) levels."

For the rest of the day, the rupee is seen moving in a range of 85.80 and 86.20 a dollar. Dealers have pegged key technical support for the Indian unit at 86.10 a dollar.  (Pratiksha)

India Rupee: Expected range for rupee - Jul 16

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

(Pratiksha)

End

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

Edited by Rajeev Pai

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