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Informist, Wednesday, Jul. 23, 2025

By Pratiksha

NEW DELHI – The rupee ended at a one-month low against the dollar, falling for the sixth consecutive trading day, as foreign banks bought the greenback for foreign fund outflows, dealers said. However, broad-based weakness in the dollar index limited losses for the Indian unit, they said. 

"After the fixing window ended, there was sudden demand (for dollars) in the market. Some outflows were from equities and some custodian clients were also there, but the 86.50 (a dollar) resistance remained protected," a dealer at a state-owned bank said. 

On Wednesday, the rupee ended at 86.4075 a dollar, against 86.3675 on Tuesday. The local unit traded in a range of almost 13 paise during the day. With a fall of almost 0.1%, the rupee was an outlier among its emerging market peers, which rose 0.1-0.4% against the dollar.  

The rupee started the day slightly lower against the greenback, shrugging off the rise in its Asian peers after US President Donald Trump annnounced a trade deal with Japan and the Philippines, leading to hope that Washington may strike similar agreements with other countries.

The US-Japan trade deal set tariffs on Japan's exports to the US at 15%, lower than the earlier proposed 25%. The deal also involved a commitment by Japan to invest $550 billion in the US.

The rupee fell as some banks bought dollars for foreign fund outflows from Indian companies, dealers said. Some dealers said the foreign fund outflows were likely on account of JSW Paints' acquisition of Amsterdam-based Akzo Nobel.

Some banks also purchased the greenback on behalf of importers, who feared the Indian unit might fall further in the near term, weighing on the local unit, dealers said. The rupee has depreciated 0.8% against the dollar so far this month. 

Meanwhile, weakness in the dollar index limited losses for the Indian unit, according to dealers. The dollar index declined to a near two-week low as the yen rose sharply after Trump announced the trade deal with Japan. The yen touched its strongest level since Jul. 11 at 146.20 per dollar on the trade news. 

At 1530 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was 97.41, against 97.40 Tuesday and 97.85 Monday. Earlier in the day, the Indian unit was supported by some state-owned banks' dollar sales ahead of daily reference rate fixing, some dealers said. 

Meanwhile, volume in the currency market was lower than usual as traders refrained from placing large bets, awaiting clarity on or further developments related to the India-US trade deal. "At this point the rupee is stuck in a tight range, with a depreciation bias because the trade deal has still not come through," a dealer at a private sector bank said. "Till the time there is no positive development on the trade deal, we will continue to see subdued volumes and some fall (in the rupee)." 

Recent media reports had said that chances of an interim trade deal between India and the US before Trump's Aug. 1 deadline seem to be less as both the countries remain at a stalemate over tariff cuts on key agricultural and dairy products. 

During the last leg of trade, the rupee fell to the day's low of 86.4650 a dollar, as some banks bought dollars, likely for foreign fund outflows from Indian markets. So far in July, FPIs have withdrawn $727.6 million from domestic markets on a net basis.

"The near-term outlook for the rupee remains weak amid foreign funds outflow and risk aversion," Dilip Parmar, currency analyst at HDFC Securities, said. "Spot USD-INR (dollar/rupee) has support at 85.90 and resistance at 86.70."

While some exporters sold dollars to take advantage of the relatively higher dollar/rupee levels, most remained on the sidelines as they expect the rupee to fall further in the coming days. Exporters may step in to sell dollars if the rupee falls past 86.50 a dollar, dealers said. 

FORWARDS

Dollar/rupee forward premiums, particularly near-tenor contracts, ended off their earlier highs after the Reserve Bank of India infused INR 500 billion worth of liquidity into the system through its two-day variable rate repo auction at 1315-1345 IST, dealers said. This was the first variable rate repo auction since Jun. 10. 

Earlier in the day, the one-year dollar/rupee forward premium had risen to a near three-week high, tracking a fall in US Treasury yields, dealers said. US yields fell after Trump announced trade deals with two trade partners before the Aug. 1 deadline for tariffs. Forwards of a currency pair are reflective of the interest rate differential between two countries. 

Near-tenure forward premiums had risen earlier in the day, tracking a rise in the cost of borrowing the rupee overnight, dealers said. The dollar-rupee overnight swap rate rose to 0.40 paisa on Wednesday from 0.37 at close on Tuesday. 

Market participants see strong technical support for the one-year dollar/rupee forward premium at 2.05-2.10%. At 1530 IST, the one-year exact period dollar/rupee forward premium was 2.02%, unchanged against Tuesday. On an absolute basis, the premium was at 175.42 paise, against 174.19 paise Tuesday. It had risen to a high of 2.04% earlier in the day.

OUTLOOK

On Thursday, the rupee will take cues from movement in the dollar index and crude oil prices, dealers said. Market participants will also closely monitor any further development on the India-US trade deal and other tariff-related news from the US. 

Dealers expect foreign portfolio investors to continue to buy dollars to exit the Indian market, weighed on the Indian unit. However, they expect exporters to step in through dollar sales in case the domestic unit falls beyond the key 86.50 a dollar level. "Given the current conditions, I am seeing 86.80 as the worst case scenario for rupee," a dealer at a big state-owned bank said. 

During the day, the rupee is seen moving in a range of 86.20 to 86.60 a dollar. Dealers see key technical support for the rupee at 86.50 a dollar.

India Rupee - World FX: Yen falls on speculation Japan PM may resign

MUMBAI – The Japanese yen fell 0.2% against the greenback after rising earlier in the day over speculation that Japan's Prime Minister Shigeru Ishiba may resign following his Liberal Democratic Party's defeat in the elections to the Upper House of the country's parliament. However, Ishiba later denied such reports. "I have never made such a statement... The facts reported in the media are completely unfounded," he said.

The yen had risen early Wednesday after US President Donald Trump announced a trade deal with Japan, effectively lowering tariffs to 15% from the earlier proposed 25%. The deal also involved a commitment by Japan to invest $550 billion in the US. "I just signed the largest TRADE DEAL in history with Japan," Trump said on his social media platform Truth Social. "We just completed a massive Deal with Japan, perhaps the largest Deal ever made. Japan will invest, at my direction, $550 Billion Dollars into the United States, which will receive 90% of the Profits."

The euro fell 0.2% against the dollar ahead of the rate decision by the European Central Bank Thursday. The ECB is expected to keep the benchmark interest rate unchanged. A rise in European shares limited the fall of the euro. The currency also came under pressure owing to uncertainty around the US-European Union trade deal. Rather, a few countries in the EU were considering retaliatory measures against the US, reports suggested.

The pound sterling was up 0.1% against the dollar. The benchmark index of the UK, The Financial Times Stock Exchange 100 Index, was up 0.5% in early trade, which supported the pound sterling. The Australian dollar and the Canadian dollar were up 0.4% and 0.1%, respectively, against the dollar, due to weakness in the US currency. The Swiss franc was steady against the dollar.

The dollar index, which measures the strength of the greenback against a basket of six major currencies, was 97.44 at 1443 IST, against 97.40 Tuesday and 97.85 Monday. The dollar index remained broadly weak on uncertainty around the US trade deal with Europe and as Trump continued his attacks on US Federal Reserve Chair Jerome Powell. 

Trump called Powell a "numbskull" at an event with Philippines President Ferdinand Marcos, Jr. "People aren't able to buy a house because this guy is a numbskull, he keeps the rates too high, and probably is doing it for political reasons," he said. Meanwhile, US Treasury Secretary Scott Bessent said Tuesday that officials from the US and China would meet in Stockholm next week to discuss an extension of the tariff deadline as well as a trade deal.  (Sourabh Kumar)

India Rupee: Down as foreign banks buy dollars for FX outflows; overall volume low

MUMBAI – The rupee was down against the dollar as some foreign banks purchased the greenback, likely due to foreign fund outflows from Indian companies, dealers said. Overall volumes remained slightly lower than usual in the currency market, which exaggerated the movement in the rupee, dealers said.

"Some FPI outflows are happening through foreign banks," a dealer with a state-owned bank said. Importers or exporters did not buy or sell dollars in large quantum as they waited for lucrative dollar/rupee rates, dealers said. The rupee had hit an over one-month low of 86.4650 a dollar in early trade on account of foreign fund outflows.

Most exporters waited for the rupee to fall below 86.50 a dollar before selling dollars in large quantum. Similarly, importers waited for the Indian currency to rise above 86.30 before buying dollars in significant quantum, dealers said.

The rupee also came under pressure as the Asian Development Bank lowered its growth forecast for India to 6.5% for the ongoing financial year. "India, the region's second-largest economy, is forecast to grow by 6.5% this year and 6.7% next year—down 0.2 and 0.1 percentage points, respectively, from April projections—as trade uncertainty and higher U.S. tariffs affect exports and investment," it said in a report.

The dollar index was broadly lower, which supported the rupee, dealers said. The dollar index, which measures the strength of the greenback against a basket of six major currencies, remained weak at 97.41 at 1322 IST, against 97.40 Tuesday and 97.85 Monday. The dollar remained weak on uncertainty around the US trade deal with Europe, and as US President Donald Trump continued his attacks on US Federal Reserve Chair Jerome Powell.

Trump called Powell a "numbskull" at an event with Philippines President Ferdinand Marcos Jr. "People aren't able to buy a house because this guy is a numbskull, he keeps the rates too high, and probably is doing it for political reasons," he said.

During the day, the rupee is seen moving in a range of 86.20-86.50 against the greenback. Dealers peg key technical support for the Indian unit at 86.50 a dollar.  (Sourabh Kumar)

India Rupee: Premiums off highs after RBI announces INR-500-bln VRR auction

NEW DELHI – Dollar/rupee forward premiums, particularly the near-tenor contracts, came off their earlier highs after the Reserve Bank of India announced it will conduct a two-day variable rate repo auction for INR 500 billion at 1315-1345 IST, dealers said. 

This is the first variable rate repo auction since Jun. 10. "Forwards came off immediately after the auction was announced. Also because not a lot of people were expecting this step," a dealer at a private sector bank said. 

Earlier in the day, the one-year dollar/rupee forward premium had risen to a near three-week high, tracking a fall in US Treasury yields, dealers said. US yields fell after US President Donald Trump announced trade deals with two trade partners before the Aug. 1 deadline for tariffs. Trump announced a pact with Japan and with the Philippines. US Treasury Secretary Scott Bessent said more such deals were coming. Forwards of a currency pair are reflective of the interest rate differential between two countries. 

Near-tenure forward premiums had risen earlier in the day, tracking a rise in the cost of borrowing the rupee overnight, dealers said. The dollar-rupee overnight swap rate rose to 0.40 paisa on Wednesday from 0.37 at close on Tuesday. 

Market participants see strong technical support for the one-year dollar/rupee forward premium at 2.05-2.10%. At 1340 IST, the one-year exact period dollar/rupee forward premium was 2.02%, unchanged against Tuesday. On an absolute basis, the premium was at 175.92 paise, against 174.19 paise Tuesday. It had risen to a high of 2.04% earlier in the day.  (Pratiksha)

India Rupee: Technical levels for rupee - Jul 23

MUMBAI – At 1212 IST, the rupee was at 86.3675 per dollar. At 0900 IST, the rupee was at 86.4100 a dollar, against the previous close of 86.3675. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Sourabh Kumar)

India Rupee - Asia FX: Up on weak dollar, US trade deal with Japan, Philippines

MUMBAI – Asian currencies rose against the dollar, supported by a weak dollar index, after US President Donald Trump announced trade deals with Japan and the Philippines late Tuesday. The dollar index remained broadly weak on uncertainty around the US trade deal with Europe and as Trump continued his attacks on Federal Reserve chair Jerome Powell.

The dollar index, which measures the strength of the greenback against a basket of six major currencies, was 97.47 at 0837 IST, against 97.40 Tuesday and 97.85 Monday. Trump announced on his truth social handle about the trade deal reached with Japan and the Philippines, reducing the tariff to 15% and 19%, respectively. He also announced the terms of trade deal reached earlier with Indonesia.

Meanwhile, US Treasury Secretary Scott Bessent said Tuesday that officials from the US and China would meet in Stockholm next week to discuss an extension of the tariff deadline as well as a trade deal.

The Taiwan dollar rose 0.5% against the greenback after data showed export orders from Taiwan jumped in June. Export orders rose 24.6% on year to $56.77 billion in June, beating estimates. 

The South Korean won rose 0.2% as the nation's consumer sentiment rose to a multi-year high in July. A survey conducted by the Bank of Korea showed that its consumer sentiment index was up 2.1 points in July to 110.8. It was the highest since 2021. The optimism was driven by supplementary budget of the government and its other measures the boost the economy. 

The Philippines peso rose 0.2% against the US dollar after US President Donald Trump announced a trade deal with the country, announcing a new 19% tariff on its exports to the US. The Indonesian rupiah rose 0.2% against the dollar. It follows Trump's announcement of the terms of the trade deal reached with Indonesia. The Malaysian ringgit and the Thai baht were up 0.2% and 0.1%, respectively, against the dollar.  (Sourabh Kumar)

India Rupee: Tad down on likely FX outflows; volumes low in early trade

MUMBAI – The rupee was slightly down in early trade as a few banks purchased dollars, likely for foreign fund outflows, dealers said. Some importers were also buying the greenback, which weighed on the rupee, dealers said. Overall volumes in the currency market were lower than usual, which exaggerated the movement in the dollar/rupee, they said.

"I though after the Japan trade deal, it (dollar/rupee) will come down, but it seems there is some FII (foreign institutional investor) buying," a dealer with a state-owned bank said. A few dealers said dollar purchases related to JSW Paints' acquisition of Amsterdam-based Akzo Nobel weighed on the rupee in early trade. However, others did not confirm this.

The US-Japan trade deal set tariffs on Japan's exports to the US at 15%, lower than the earlier proposed 25% tariff. The deal also involved a commitment by Japan to invest $550 billion in the US.

A few importers also purchased the greenback, anticipating the rupee might fall more, dealers said. The rupee has fallen against the dollar in the last six trading days, down from 85.99 a dollar on Jul. 14 to Tuesday's 86.37. 

The dollar index, which measures the strength of the greenback against a basket of six major currencies, remained weak at 97.41 at 0928 IST, against 97.40 Tuesday and 97.85 Monday. The dollar remained weak on uncertainty around the US trade deal with Europe, and as US President Donald Trump continued his attacks on US Federal Reserve Chair Jerome Powell.

Trump called Powell a "numbskull" at an event with Philippines President Ferdinand Marcos Jr. "People aren't able to buy a house because this guy is a numbskull, he keeps the rates too high, and probably is doing it for political reasons," he said.

Market participants expect the rupee to fall further during the day, driven by likely foreign fund outflows. They expect exporters to sell dollars, should the rupee fall past 86.50 a dollar. During the day, the rupee is seen moving in a range of 86.20-86.50 against the greenback. Dealers peg key technical support for the Indian unit at 86.50 a dollar.  (Sourabh Kumar)

India Rupee: Expected range for rupee - Jul 23

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

(Sourabh Kumar)

End

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

Edited by Avishek Dutta

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