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Informist, Friday, Jul. 25, 2025

By Gowri Lakshmi

MUMBAI – The rupee ended the week at an over one-month low against the dollar owing to persistent demand for dollars from foreign portfolio investors and importers, dealers said. Slight strengthening of the dollar index also weighed down the rupee, dealers said. However, dollar sales, likely for some corporate inflows and on behalf of exporters, limited the fall of the rupee, dealers said. A few dealers also speculated that the Reserve Bank of India sold dollars to prevent the rupee from falling further and to curb excessive volatility. 

"Rupee has entered a danger zone now, the 60 levels are crucial because if that breaks, then the fall to 80 (86.80) will be sooner than expected. And today, there was excessive dollar demand from all sides," a dealer at a private sector bank said. 

After falling to a low of 86.6300 a dollar, the Indian unit settled at 86.5100, closing lower against the dollar for the seventh consecutive trading day. The rupee ended at 86.4050 a dollar Thursday. The domestic currency moved in a range of over 17 paise during the day. 

Most other Asian currencies also weakened against the greenback, down 0.1%-0.8% against the dollar, with the Philippine peso being the worst hit, followed by the South Korean won.  

The rupee started the day lower against the dollar at 86.5700 due to a slight strengthening of the dollar index after better than expected jobless claims data from the US and recent remarks about US Federal Reserve Chair Jerome Powell by US President Donald Trump, dealers said. The dollar index, which measures the strength of the dollar against a basket of six major currencies, advanced after US intial jobless claims data for the week ended Saturday fell to a three-month low, hinting at a still resilient US labour market. 

The intial jobless claims data, published Thursday, showed that the number of Americans filing for unemployment benefits fell 4,000 to 217,000, the lowest level since April. Economists in a Reuters poll had forecast 226,000 claims for the same period. Trump and Powell locked horns Thursday as the president visited the US Federal Reserve headquarters in Washington, where Trump was seen calling for an interest rate cut. 

Trump also said he was abandoning any consideration of firing Powell despite the public backlash and threats over the cost overrun on the Fed's renovation. "To do that is a big move, and I just don't think it's necessary...I believe that he's going to do the right thing," Trump said. Market participants now await the Federal Open Market Committee's policy announcement on Wednesday, where the central bank is widely expected to hold rates steady at 4.25-4.50%. At 1530 IST, the dollar index was at 97.69, a tad higher than 97.52 Thursday and 97.21 Wednesday. 

The rupee also came under pressure as foreign banks, inlcuding a UK-based bank, purchased dollars on behalf of overseas investors who withdrew funds from the domestic financial markets and moved to other safe-haven currencies, dealers said. They said investor sentiment took a hit due to delay in an interim trade deal with the US, which was expected at the beginning of this month. Earlier this week, media reports had said the India-US trade deal was unlikely before the reciprocal tariffs come into effect on Aug. 1. Both the benchmark stock indices, the Nifty 50 and the BSE Sensex, ended 0.9% lower each.

Banks also purchased dollars on behalf of importers, who bought dollars fearing a sharp fall of the rupee in the coming days, dealers said. A few importers also bought dollars to meet their month-end payment obligations, which pushed the rupee to a low of 86.6300 a dollar, its lowest level since Jun. 23. 

However, in early trade, a few banks sold dollars, likely relating to some foreign fund inflows into Indian corporates, dealers said. This helped the rupee pare some of the losses, dealers said. A few exporters also actively sold dollars at 86.50 a dollar and below, which provided further cushion for the rupee, dealers said. Some dealers speculated that the RBI stepped in at 86.61 a dollar and lower levels to curb excessive market volatility to prevent the rupee from falling further. "RBI definitely seemed to be there, but the dollar purchases outweighed their (dollar) sales, they weren't aggressive," a dealer at a foreign bank said. 

FORWARDS

The dollar/rupee forward premium ended higher across tenures Friday as banks bought dollars for forward delivery on behalf of a few importers and on account of some foreign fund inflows related to initial public offerings, dealers said. However, some banks also sold forward dollars on expectations that the forward premium may not rise more from current levels, dealers said.

Market participants said importers increased their forward dollar purchases Thursday and Friday, noting a rise in the spot dollar/rupee rate. This week, the Indian currency has fallen around 0.6% against the greenback. This week, the one-year exact-period dollar/rupee forward premium rose to 2.03% from 1.97% from the end of last week. Market participants expect the rise of dollar/rupee forward premium to be capped around 2.10%. 

A slight increase in the domestic liquidity surplus capped the rise of premiums, dealers said. Further, the benchmark 10-year US Treasury yield rose Thursday, which also limited the premium's rise, dealers said. The yield on the 10-year US Treasury note rose three basis points Thursday to 4.43%. Forwards of a currency pair are reflective of the interest rate differential between the two countries. 

Friday, the one-year exact period dollar/rupee forward premium ended at 2.03%, down from Thursday's 2.02%. On an absolute basis, the premium was at 175.45 paise, against 174.95 paise Thursday. 

OUTLOOK

The currency market is shut Saturday. On Monday, the rupee will takes cues from the movement in the dollar index and the offshore Chinese yuan, dealers said. The rupee may also take cues from the movement of crude oil prices, dealers said. The rupee is likely to come under pressure as importers may purchase dollars in large quantum to meet their month-end payment obligations, dealers said. Investors will also closely monitor any development in the India-US trade deal. Dealers said until there is more clarity, overseas investors are likely to withdraw funds from Indian markets, which may put the rupee under pressure. 

However, the rupee may also be supported as dealers expect foreign fund inflows into the initial public offerings of domestic companies, which are lined up next week, dealers said. The National Securities Depository Ltd. issue will open for subscription on Wednesday and close on Friday. Anchor investors can place their bids on Tuesday. It has set a price band of INR 760 to INR 800 for the initial public offering.

During the day, the rupee is expected to move in a range of 86.30 to 86.75 against the greenback. Dealers peg key technical support for the rupee at 86.65 a dollar against the dollar. 

India Rupee - World FX: Euro flat; European Central Bank holds rates steady

MUMBAI – The euro was flat against the dollar Friday, after the European Central Bank held its benchmark lending rates steady at 2% at its July meeting Thursday, citing the "exceptionally uncertain" global landscape due to trade disputes. The ECB had reduced its key interest rates four times so far this year, bringing them from 3% in January to 2% in June. "The environment remains exceptionally uncertain, especially because of trade disputes," the ECB said in a statement. 

Meanwhile, the business sentiment in Germany, the eurozone's largest economy, improved in July to its highest level in over a year, data published earlier in the day showed. The Ifo Institute said the business climate index rose to 88.6 in July, against 88.4 the month before. Economists polled by Reuters had forecast a rise to 89.0.

The Japanese yen was down 0.5% against the greenback. Core consumer inflation in Tokyo slowed in July but remained well above the Bank of Japan's 2% target, data published Friday showed, raising expectations for another interest rate hike this year. The BoJ is scheduled to meet for its monetary policy meeting on Jul. 30-31. The Tokyo CPI rose 2.9% this month from a year earlier, slightly below the market forecast of a 3.0% increase. The core inflation had risen 3.1% in June. 

The pound sterling was down 0.3% against the dollar after consumer confidence in the UK in July fell as the country struggles with weak economic growth outlook amid tariff uncertainties from the US. The Consumer Confidence Index declined to -19 in July from -18 the month before, reversing the improvement seen in June. However, losses in the currency were likely limited as the retail sales volumes for June rose 0.9% on month, rebounding from May's 2.8% fall. 

The dollar advanced slightly after better-than-expected initial jobless claims data and the recent remarks by US President Donald Trump about US Federal Reserve Chair Jerome Powell. The initial jobless claims data for the week ended Saturday, published Thursday, fell to a three-month low, hinting at a stable labour market amid the continuing tariff uncertainy. The initial jobless claims data, published Thursday, showed the number of Americans filing for unemployment benefits fell 4,000 to 217,000, the lowest level since April. Economists polled by Reuters had expected 226,000 claims for the period. 

Trump Thursday visited the Fed headquarters in Washington, DC, along with Powell. The two addressed the media about Trump's claims over cost overruns at the headquarters. Trump suggested he was abandoning any consideration of firing Powell despite threatening and publicly criticising him earlier. "To do that is a big move, and I just don't think it's necessary," Trump said. "I believe that he's going to do the right thing," he added.

Due to the fall in the euro, the Japanese yen, and the pound sterling, the dollar index stregthened further during European market hours. At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.69, up slightly from 97.52 Thursday and 97.21 Wednesday. Market participants now eye the US Federal Open Market Committee's policy announcement due Wednesday, where the central bank is widely expected to hold rates steady at 4.25-4.50%.

The Canadian dollar was down 0.3% against the greenback after the country's retail sales shrank 1.1% in May, data published Thursday showed. The reading was higher than analysts' forecast in a Reuters poll of a 0.3% fall.

The Australian dollar and the New Zealand dollar fell 0.3% each against the greenback. The Swiss franc traded flat against the US unit.  (Gowri Lakshmi)

India Rupee: Hits 1-month low on foreign fund outflows, slight rise in dlr index

MUMBAI – The rupee remained down Friday and hit an over one-month low against the dollar on banks' dollar purchases for foreign fund outflows, dealers said. A slight strengthening of the dollar index also weighed on the Indian unit, dealers said. "There are significant outflows, especially driven by sentiment due to no clarity or details on the India-US trade deal," a currency trader at a brokerage firm said. 

The rupee was weighed down as foreign banks, including a UK-based one, purchased dollars on behalf of foreign portfolio investors, who withdrew funds from domestic financial markets and moved to other safe-haven assets, dealers said. At 1312 IST, the benchmark stock indices, the Nifty 50 and the BSE Sensex, were down 0.9% and 0.8%, respectively. 

The rupee was dragged to an over one-month low of 86.5875 a dollar. It came under further pressure as the dollar index strengthened slightly after better-than-expected jobless claims data and as US President Donald Trump said he does not intend to fire US Federal Reserve Chair Jerome Powell, after the president's recent visit to the Federal Reserve headquarters in Washington. 

The jobless claims data for the week ended Saturday fell 4,000 to 217,000, the lowest level since April. In a Reuters poll, economists had forecast claims for the period to be 226,000. At 1319 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.52, unchanged from Thursday and a tad up from 97.21 Wednesday.

Earlier in the day, dollar sales for exporters and likely foreign fund inflows into corporates, limited the fall of the rupee, dealers said.  For the rest of the day, the rupee is seen moving in a range of 86.40 to 86.65 a dollar. Dealers peg key technical support for the rupee at 86.60 a dollar.  (Gowri Lakshmi)

India Rupee: Technical levels for rupee - Jul 25

MUMBAI – At 1143 IST, the rupee was at 86.5350 per dollar. At 0900 IST, the rupee was at 86.5700 a dollar, against the previous close of 86.4050. 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 as dlr strengthens post strong US economic data

MUMBAI – Most Asian currencies were down against the dollar early Friday as the dollar index inched up after a fall in last week's US jobless claims figures and a rise in business activity this month. The dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 97.53 at 0951 IST, against 97.52 Thursday and 97.21 Wednesday.

Data showed that the number of Americans who filed for jobless claims in the week ended Saturday fell 4,000 to a seasonally adjusted figure of 217,000. It was lower than 226,000 claims estimated in a poll by Reuters.

Another set of data released Thursday showed that business activity in the US picked up in July, with the S&P Global Composite Purchasing Managers' Index Output Index rising to 54.6 this month. It was mostly due to an improvement in the services sector, with services flash PMI rising to 55.2 in July from 52.9 in June. This was also higher than the forecast of 53.0 in a Reuters poll. The flash manufacturing PMI, however, contracted to 49.5 this month from 52.9 in June. A value above 50 indicates expansion, while below 50 shows contraction.

The Taiwan dollar was down 0.3% against the greenback due to a rise in the dollar index. However, the losses were limited as data released Thursday showed that the country's industrial production rose 18.7% on year in June, growing for the 16th consecutive month. This is due to strong demand for artificial intelligence products. The index for industrial production, released by the economic affairs ministry, rose to 111.48 last month.

The South Korean won fell 0.3% against the dollar. Market participats await a trade deal between the US and South Korea. Its officials had visited the US on Thursday to discuss a trade agreement, and said they would be able to strike a deal before the Aug. 1 deadline for tariffs. 

The Philippines peso was down 0.3% and the Indonesian rupiah fell 0.1% against the dollar. The Thai baht was also down 0.1% against the greenback. The Malaysian ringgit was steady against the dollar. Market participants await the rate decision by the Bank of Japan and the US Federal Open Market Committee, both due next week.  (Sourabh Kumar)

India Rupee: Falls as dollar index rises; likely FX inflows limit losses

MUMBAI – The rupee fell against the dollar Friday as the dollar index rose after better than expected weekly jobless claims data in the US, which indicated a resilient labour market, dealers said. However, foreign fund inflows into domestic financial markets limited the fall for the rupee, they said. 

"Some corporate inflows are seen, that is supporting. But dollar seems to be on a strong foothold, it's only after FOMC (Federal Open Market Committee) that we'll get a clearer picture of rupee direction," a currency trader at a brokerage firm said. 

The dollar index advanced after US initial jobless claims for the week ended Saturday showed that the number of Americans filing for unemployment benefits fell to a three-month low. The jobless claims fell 4,000 to 217,000, the lowest level since April. In a Reuters poll, economists had forecast claims for the period to be 226,000. 

At 0940 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.55, broadly steady from 97.52 Thursday and 97.21 Wednesday. A fall in domestic equity indices also weighed down the rupee, according to some dealers. At 0944 IST, the benchmark stock indices, the Nifty 50 and BSE Sensex, were down 0.5%, each. 

However, some banks sold dollars, likely for foreign fund inflows into Indian markets, which limited the fall of the rupee, dealers said. Some dealers also speculated that a few exporters also sold the greenback at 86.52 a dollar and lower levels, to take advantage of the relatively higher dollar/rupee levels, dealers said. The rupee had hit a low of 86.5800 a dollar shortly after the currency market opened. 

During the day, the rupee is seen moving in a range of 86.30 to 86.65 a dollar. Dealers peg key technical support for the Indian unit at 86.60 against the greenback.  (Gowri Lakshmi)

India Rupee: Expected range for rupee - Jul 25

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

(Sourabh Kumar and Gowri Lakshmi)

End

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

Edited by Avishek Dutta

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