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Informist, Monday, Jul. 21, 2025

By Gowri Lakshmi

MUMBAI – 

The rupee ended near a one-month low Monday as banks persistently purchased the dollars on behalf of foreign portfolio investors, oil marketing companies and other importers, dealers said. However, some exporter dollar sales limited the fall in the rupee, dealers said. "There was significant outflows by FPIs. Today's (Monday's) outflow was also met with general dollar demand, not just that of a panic situation," a currency trader at a brokerage firm said. 

After hitting a low of 86.3525 a dollar, the rupee ended at 86.2950 against the greenback, sharply down from the previous close of 86.1475 a dollar. The rupee moved in a range of over 16 paise during the day. 

Other Asian currencies moved on a mixed note during the day as investors remained on the tenterhooks, awaiting further details on US trade deals and tariff policies. The South Korean won was the biggest gainer while the Indonesian rupiah was the worst hit. The dollar index remained broadly steady during the day and was little impacted from an improving US consumer sentiment.

The rupee opened lower against the dollar at 86.2150 as foreign banks, including a Germany-based one, purchased dollars on behalf of overseas investors, dealers said. The rupee came under pressure as overseas investors withdrew funds from domestic financial markets and moved to other safe-haven assets amid lack of any details on the development of India-US trade deal, which was expected earlier this month, dealers said. 

Shortly after the market opened, the rupee was dragged to the day's low as oil marketing companies and other importers rushed to purchase the greenback, fearing a further fall in the rupee, dealers said. The rupee was also weighed down as banks bought dollars during the daily reference-rate fixing window, dealers said. They said the lower-than-usual volume in the currency market also aggravated the fall in the rupee. "Volume was paltry as exporters are majorly waiting for 86.50 and importers are not in a panic situation," a dealer at a private-sector bank said. 

However, noting the sharp fall in the rupee, a few exporters sold dollars at 86.30 and above levels to take advantage of the relatively higher dollar/rupee levels, which prevented the rupee from falling further, dealers said. Despite the domestic currency breaching the crucial support level of 86.25 a dollar and 86.30 a dollar, the Reserve Bank of India's intervention was absent in the currency market.

The domestic stock market reversed its losses from early trade as a few banks sold dollars for like foreign-fund inflows, which provided further cushion to the rupee, according to some dealers. On Monday, both the benchmark stock indices, the Nifty 50 and the BSE Sensex, ended 0.5% higher.  

The dollar index remained broadly steady during the day. On Friday, data showed that the US consumer sentiment in July improved even as households continue to expect a substantial inflationary risks rising in the future. The consumer sentiment index inched up to 61.8 from 60.7 in June. The data was also better than expected as economists had expected the index to rise to 61.5 in a Reuters poll.

At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.29, steady from 98.46 Friday and from 98.62 Thursday.

Investors also assessed US Commerce Secretary Howard Lutnick's remarks on Sunday where he said the Aug. 1 deadline for the implementation of the reciprocal tariffs were a hard deadline to US trading partners but also kept the doors open for trade negotiations even beyond the deadline. "Nothing stops countries from talking to us after Aug. 1, but they're going to start paying the tariffs on Aug. 1," Lutnick told CBS News.

FORWARDS

The one-year dollar/rupee forward premium ended at an over 2-week high of 2%, tracking a fall in the benchmark 10-year US Treasury note, dealers said. The forward premium also rose as importers purchased dollars for forward delivery, dealers said. However, a few exporters also sold dollars for forward delivery, which limited the rise in premiums, dealers said. 

The yield on the 10-year US Treasury note fell 3 basis points Friday to 4.44% after US Federal Reserve Governor Christopher Waller called for a rate cut at the US Fed's meeting at the end of the month. Forwards of a currency pair are reflective of the interest rate differential between the two countries. Monthly data published on Jul. 3 showed a sharp decline in private-sector jobs growth even as unemployement rate fell.

After Waller's recent remarks for an interest rate cut, the probability of a rate cut by 25 basis points at the September Federal Open Market Committee Meeting rose to 59.6%, from 55.9% on Friday, according to the CME FedWatch tool. 

The one-year exact period dollar/rupee forward premium ended at 1.99%, up from 1.97% Friday and 1.96% Thursday. On an absolute basis, the premium was at 171.79 paise, against 169.84 paise Friday and 168.83 paise Thursday.

OUTLOOK

On Tuesday, the rupee will take cues from the movement in dollar index and crude oil prices, dealers said. The rupee may also track movements in the offshore Chinese yuan, dealers said. The rupee is likely to come under pressure as banks may purchase dollars on behalf of overseas investors and importers, dealers said. Market participants will also look out for any tariff-related news and US-India trade deal. 

Should the rupee come under immense pressure and move to the crucial support level of 86.40 a dollar, dealers expect the RBI to step in with dollar sales to prevent the rupee's sharp fall. Dealers also expect exporters to sell dollars at 86.40 and above levels, which may support the rupee. During the day, the rupee is seen moving in a range of 86.20 to 86.50 a dollar. Dealers see key technical support for the rupee at 86.40 a dollar. 

India Rupee - World FX:Yen up; Japan ruling party loses upper house majority

MUMBAI – The Japanese yen rose 0.6% against the dollar after Japan's ruling coalition lost its majority in the parliament's upper house. Financial markets in Japan were closed Monday on account of Marine Day. The Liberal Democratic Party of Japanese Prime Minister Shigeru Ishiba had already lost its majority in the lower house of parliament in October.

The dollar slipped in early European trade Monday on concern over US tariffs. In the latest development on tariffs, US Commerce Secretary Howard Lutnick said in an interview to CBS News Sunday that Aug. 1 would be the hard deadline for tariffs. However, he said countries could still continue to have trade talks with the US even after the deadline.

The dollar index, which measures the strength of the greenback against a basket of six major currencies, was 98.25 at 1446 IST, down from 98.46 Friday and 98.62 Thursday. Data released Friday showed that consumer sentiment in the world's largest economy improved in July. The University of Michigan consumer sentiment index rose to 61.8 in July from last month's 60.7. Consumers' 12-month period inflation expectation also fell to 4.4% in July from 5.0% last month. 

The euro was up 0.2% against the greenback Monday as market participants await more details about trade talks between the European Union and the US. Moreover, market participants look forward to the rate decision by the European Central Bank Thursday, where it is expected to keep the benchmark rates unchanged. A survey conducted by ECB showed that firms in the region were optimistic about prospects of their growth, while experiencing pressure on their profits due to the ongoing trade tensions with the US. 
 

The pound sterling rose 0.3% against the dollar due to a weak dollar. However, gains in the currency was capped as a survey by Deloitte Monday showed that consumer confidence fell to 10.4% in Apr-Jun. There were concerns over slowing labour market and business blamed increased employment taxes and a higher minimum wage law for their reluctance to hire employees. The Australian dollar and the Swiss franc rose 0.1% each, while the Canadian dollar was steady against the greenback.  (Sourabh Kumar)

India Rupee: Premiums up tracking fall in US yields, importers' fwd dlr buys

MUMBAI – The one-year forward dollar/rupee forward premium rose to an above 2-week high of 2%, tracking a fall in the benchmark 10-year US Treasury note, dealers said. The forward premium also rose as importers purchased dollars for forward delivery, dealers said.

"Honestly, no big change is seen in the levels," a dealer at a brokerage firm said. "The US yields have fallen a bit, and some importers are also paying, but again they aren't very aggressive in nature that's why the levels are not shooting up."  However, a few exporters also sold dollars for forward delivery, which limited the rise in premiums, dealers said. 

The yield on the 10-year US Treasury note fell 3 basis points Friday to 4.44% after US Federal Reserve Governor Christopher Waller called for a rate cut at the US Fed's meeting at the end of the month. It fell further in early European trade Monday. "The private sector is not doing as well as everybody thinks it is," Waller said. "Most of the employment growth we saw last month was in the public sector, and that means the private sector is not doing particularly well." Forwards of a currency pair are reflective of the interest rate differential between the two countries. 

Monthly data published on Jul. 3 showed a sharp decline in private-sector jobs growth even as unemployement rate fell.

After Waller's recent remarks for an interest rate cut, the probability of a rate cut by 25 basis points at the September Federal Open Market Committee Meeting rose to 59.6%, from 55.9% on Friday, according to the CME FedWatch tool. 

At 1342 IST, the one-year exact period dollar/rupee forward premium was 1.99%, up from 1.97% Friday and 1.96% Thursday. On an absolute basis, the premium was at 171.79 paise, against 169.84 paise Friday and 168.83 paise Thursday.  (Gowri Lakshmi)

India Rupee:Pares some losses on exporter dlr sales; importer dlr buys weigh

MUMBAI – The rupee pared some of the losses from early trade as banks sold dollars on behalf of exporters, dealers said. However, persistent dollar demand from importers continued to weigh on the rupee, dealers said. "There is general dollar demand apart from the outflow we saw in the morning," a currency trader at a brokerage firm said. "Exporters were seen selling (dollars), nats (nationalised banks) were practically inactive and even if they were there, they would have been insignificant." 

The rupee fell to a near-one-month low of 86.3525 a dollar earlier in the day owing to dollar purchases by foreign portfolio investors, who withdrew funds from the domestic stock market, dealers said. Noting a sharp fall in the rupee, oil marketing companies and other importers also purchased the greenback, fearing a further fall in the rupee, dealers said. The rupee was also weighed down by dollar purchases during the daily reference rate-fixing window, dealers said. 

However, some exporters sold dollars at 86.30 and above levels to take advantage of the relatively higher dollar/rupee levels, dealers said. This prevented the rupee from falling further, dealers said. "Exporters are there. Again, they are also not very aggressive", a dealer from a private-sector bank said. 

The dollar index broadly remained steady even after improving consumer sentiment. Data published Friday showed that the US consumer sentiment improved in July despite households expecting a substantial risk of inflationary pressures rising in the future. The Consumer Sentiment Index climbed to 61.8 this month, compared to a final reading of 60.7 in June. The data was also better than expected as economists had expected the index to rise to 61.5 in a Reuters poll. 

At 1319 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.32, nearly steady from 98.46 Friday and 98.62 Thursday. 

For the rest of the day, the rupee is seen moving in a range of 86.15-86.40 against the greenback. Dealers peg key technical support for the rupee at 86.40 a dollar.  (Gowri Lakshmi)

India Rupee: Technical levels for rupee - Jul 21

MUMBAI – At 1045 IST, the rupee was at 86.2700 per dollar. At 0900 IST, the rupee was at 86.2150 a dollar, against the previous close of 86.1475. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Gowri Lakshmi and Sourabh Kumar)

India Rupee: Sharply down on FX outflows; exporters' dollar sales limit fall

MUMBAI - The rupee was sharply down against the dollar Monday as foreign banks purchased dollars on behalf of foreign portfolio investors, looking to withdraw funds from domestic markets, dealers said. The rupee also hit a near one-month low as oil marketing companies and other importers purchased the greenback, dealers said. However, some dollar sales by exporters limited a further fall of the rupee, they said. 

"Outflows were seen right in the morning, and now importers are bidding heavily, we may easily see 86.40 today (Monday)," a dealer at a private sector bank said. Foreign banks, including a Germany-based one, purchased dollars on behalf of overseas investors who withdrew funds from Indian stock market primarily, and moved to other safe-haven assets amid heightened uncertainty about US tariff policies. Investors also remain rattled as an interim India-US trade deal, which was expected earlier this month, has not yet been finalised. At 0931 IST, the benchmark stock indices, the Nifty 50 and the BSE Sensex were down 0.2% each. 

Noting the sharp fall of the Indian unit, oil marketing companies and other importers also purchased the greenback, fearing a further fall of the rupee, dealers said. Importers began purchasing dollars at 86.25 and below levels, dealers said. This pushed the rupee to hit a near one-month low of 86.3525 a dollar in within few minutes after the market opened. 

However, some exporters sold the greenback at 86.35 a dollar to take advantage of the relatively higher dollar/rupee levels, dealers said. This eased the pressure on rupee, they said. Dealers also said the Reserve Bank of India was completely absent from the market despite rupee breaching crucial support levels at 86.25 a dollar and 86.30 a dollar. 

The dollar index was little changed in early trade. At 0936 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.44, steady from 98.46 on Friday and 98.62 Thursday. 

During the day, the rupee is seen moving in a range of 86.15-86.50 against the greenback. Dealers peg key technical support for the rupee at 86.50 a dollar.  (Gowri Lakshmi)

India Rupee: Expected range for rupee - Jul 21

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 Sourabh Kumar)

India Rupee - Asia FX: Mixed; dlr steady as mkt awaits details on trade deal

MUMBAI – Asian currencies started the week on a mixed note with the dollar index remaining steady as markets await further details on US trade and tariff policies. US Commerce Secretary Howard Lutnick said Sunday that Aug. 1 would be the deadline for its trading partners to begin paying the reciprocal tariffs but also kept the door open for trade negotiations after the deadline. 

"Nothing stops countries from talking to us after August 1, but they're going to start paying the tariffs on Aug. 1," Lutnick told CBS News.

The dollar index did not react to the improved consumer sentiment data released Friday. The US consumer sentiment for July improved even as inflation expectations continued to decline. However, US households still saw substantial risk of inflationary pressures rising in the future. The consumer sentiment index rose to 61.8 from a final reading of 60.7 in June. The reading for July was slightly higher than the expected 61.5 by economists in a Reuters poll.

At 0731 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.49, broadly steady from 98.46 Friday and 98.62 Thursday. The Malaysian ringgit was up 0.1% and the Indonesian rupiah rose 0.3%. 

The Taiwan dollar traded flat against the dollar. The offshore Chinese yuan also traded flat as the People's Bank of China kept its benchmark lending rates unchanged, in line with market expectations after a slightly better-than-expected June quarter GDP. The one-year loan prime rate was retained at 3.0% and the five-year rate was held steady at 3.5%. 

The South Korean won was up 0.1% against the greenback. South Korea's early exports were steady in July, indicating economic resilience as Seoul worked to reach a mutually beneficial trade deal with Washington before the Aug. 1 deadline. According to data published Monday, exports dipped only 2.2% on year in the first 20 days of July against a 6.8% increase in June. 

The Thai baht was down 0.1% and the Philippines' peso was up 0.2% against the greenback in early Asian trade.  (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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