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Informist, Monday, Jul. 28, 2025

MUMBAI – The rupee ended at a five-week low against the dollar Monday on persistent demand for dollars from foreign portfolio investors and importers, dealers said. A rise in the dollar index during European market hours also weighed the Indian unit down, dealers said. "As long as a deal (between India and the US) isn't confirmed, outflows will continue and the inflows we are seeing may not be able to sustain the gains for the rupee," a dealer at a private-sector bank said. 

After hitting a low of 86.6675 against the greenback, the rupee ended at 86.6650, sharply down from its previous close of 86.5100. The Indian currency moved in a range of over 26 paise during the day.

Other Asian currencies also weakened against the dollar as US currency strengthened. Other Asian currencies fell 0.1-0.5% against the greenback, with the Taiwan dollar being the worst hit.

The rupee started the day higher against the dollar at 86.4650 and rose to a high of 86.4000 owing to foreign fund inflows from improved investor sentiment, dealers said. Investors' risk appetite improved as the US and China resumed trade negotiations Monday. Top officials from Beijing and Washington, DC, started their trade talks in Stockholm, Sweden, in a move to de-escalate the longstanding trade war between the two superpowers. Beijing is aiming to reach a durable agreement and postpone the implementation of higher-than-expected reciprocal tariffs, currently scheduled to kick in Aug. 12.

In early trade, the dollar index was broadly steady but remained on the weaker side as the euro strengthened against the US currency, dealers said. The euro gained after the US and the European Union struck a deal Sunday, which reduced tariffs on imports from the bloc to 15% from 30% threatened by President Donald Trump earlier.

However, the rupee came under pressure as banks purchased dollars on behalf of importers who were looking to meet their month-end payment obligations, dealers said. They also said a few traders purchased dollars as they trimmed their short dollar positions in view of appreciation in the US currency.

Banks also bought dollars on behalf of overseas investors who withdrew funds from domestic financial markets and moved to other safe-haven assets due to the lack of any development in the India-US trade deal and amid heightened uncertainty about US tariffs, dealers said. "Outflow is there and some unwinding of short positions also happened ahead of the FOMC (US Federal Open Market Committee). Unless there is a surprise cut from them (the US Federal Reserve), given the lack of clarity on our deal, the dollar will strengthen (against the rupee)," another dealer at a private-sector bank said.

Monday, the benchmark stock indices, Nifty 50 and BSE Sensex, ended 0.6% and 0.7% lower, respectively. The rupee was weighed down by a strengthening of the dollar index during European market hours as the euro plunged almost 0.8% against the US currency.

At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.27, up slightly from 97.67 Friday and 97.52 Thursday. Market participants now await the outcome, due Wednesday, of the US Federal Open Market Committee's policy meeting, where it is widely expected to hold the benchmark rate steady at 4.25-4.50%. According to the CME FedWatch tool, traders now see a 96.99% probability of the US Federal Reserve holding rates steady.

Despite the sharp fall in the rupee, dealers said exporters did not actively sell dollars to take advantage of the lucrative levels. However, a few dealers speculated that the Reserve Bank of India sold dollars at 86.60 a dollar and below to prevent a sharp fall of the rupee. 

FORWARDS 

The one-year dollar/rupee forward premium ended higher after hitting its highest level in nearly four weeks of 2.06% earlier in the day as banks bought forward dollars on behalf of importers, especially oil marketing companies, for upcoming payment requirements, dealers said. However, a few banks also sold forward dollars for exporters at lucrative levels, which limited the rise of the premiums, dealers said.

A fall in the 10-year benchmark US Treasury yield also pushed premiums higher, dealers said. The yield fell 3 basis points to 4.40% Friday. It was further down to 4.38% in early European trade Monday. Forwards of a currency pair are reflective of the interest rate differential between the two countries. At 1530 IST, the one-year exact period dollar/rupee forward premium was 2.05%, up from Friday's 2.03%. On an absolute basis, the premium was at 177.47 paise, against 175.95 paise Friday.

OUTLOOK

Tuesday, the rupee will takes cues from the movement in the dollar index and the offshore Chinese yuan, dealers said. The rupee is likely to come under pressure as importers may purchase dollars in large quantities to meet their month-end payment obligations, dealers said. Investors will also closely monitor any development in the India-US trade talks.

The rupee is likely to be supported by foreign fund inflows into the initial public offerings of domestic companies, dealers said. The National Securities Depository Ltd. issue will open for subscription Wednesday and close Friday. Anchor investors can place their bids Tuesday. NSDL has set a price band of INR 760-INR 800 for the public issue.

During the day, the rupee is expected to move in a range of 86.40 to 86.75 against the greenback. Dealers peg key technical support for the rupee at 86.70 a dollar against the dollar. 

India Rupee - World FX: Euro reverses gains, down 0.5% after US-EU trade deal

MUMBAI – The euro was down 0.6% against the dollar, reversing gains from earlier in the day. The euro fell after the US and the European Union secured a trade deal, in which goods from the EU into the US will attract a 15% tariff. US President Donald Trump and European Commission President Ursula von der Leyen announced the deal Sunday in Scotland.

Trump said the EU will purchase energy worth $750 billion from the US, in addition to a commitment to invest $600 billion more than their current investment in the US. The european bloc also agreed to sharply increase its purchases of military equipment from the US, Trump said. 

The euro carries a weightage of 57.6% in the dollar index. At 1521 IST, the dollar index was up 0.5% to 98.17. It was 97.67 Friday and 97.52 Thursday. The dollar index measures the strength of the greenback against a basket of six major currencies. Market participants have now shifted the focus to trade talks between the US and China starting later in the day in Sweden.

They are also looking forward to the rate decision by the US Federal Open Market Committee on Wednesday. Market participants expect the Fed to keep the benchmark rates unchanged. The odds of a rate cut in this week's FOMC decision was about 97%, according to the CME FedWatch tool.

The yen fell 0.5% against the greenback due to strength the dollar. The Australian dollar fell 0.6% against the US currency. The Canadian dollar was down 0.2% against the greenback. The pound sterling also fell 0.2% against the greenback.  (Sourabh Kumar)

India Rupee: Premium near 4-week high on importers' forward dollar buys

MUMBAI – The one-year dollar/rupee forward premium hit its highest level in nearly four weeks Monday as banks bought forward dollars on behalf of importers, especially oil marketing companies, for upcoming payment requirements, dealers said. However, a few banks also sold forward dollars for exporters at lucrative levels, which limited the rise of the premiums, dealers said.

"Importers usually won't pay at these levels, but some oilers are likely paying for their imports. And as the spot is moving up (fall in rupee), exporters are receiving, which is keeping the premium levels in check," a currency trader at a broking firm said.

A fall in the 10-year benchmark US Treasury yield also pushed premiums higher, dealers said. The yield fell 3 basis points to 4.40% Friday. It was further down to 4.38% in early European trade Monday. Forwards of a currency pair are reflective of the interest rate differential between the two countries.

Market participants now await the outcome, due Wednesday, of the US Federal Open Market Committee's policy meeting, where it is widely expected to hold the benchmark rate steady at 4.25-4.50%. According to the CME FedWatch tool, traders now see a 96.99% probability of the US Federal Reserve holding rates steady. At 1418 IST, the one-year exact period dollar/rupee forward premium was 2.06%, up from Friday's 2.03%. On an absolute basis, the premium was at 177.97 paise, against 175.95 paise Friday.  (Gowri Lakshmi)

India Rupee: Technical levels for rupee - Jul 28

MUMBAI – At 1123 IST, the rupee was at 86.5250 per dollar. At 0900 IST, the rupee was at 86.4650 a dollar, against the previous close of 86.5100. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Gowri Lakshmi and Pratiksha)

India Rupee - Asia FX: Most up on weak dollar; market eyes US-China trade talks

MUMBAI – Most Asian currencies rose against the dollar Monday on improving investor sentiment and a broadly weak dollar index. Over the weekend, US President Donald Trump and European Union Commission President Ursula Von der Leyen struck a trade deal, which slashed the import duty on the Euro bloc by half to 15%. The European Union plans to invest $600 billion in the US and would drastically increase the purchase of US energy and military equipment.

"I think this is the biggest deal ever made," Trump told media. Meanwhile, Von der Leyen said, "We have a trade deal between the two largest economies in the world, and it's a big deal. It's a huge deal. It will bring stability. It will bring predictability," Von der Leyen said. Market participants now await the US Federal Open Market Committee's policy decision due on Wednesday, where it is widely expected to keep the benchmark lending rates steady at 4.25-4.50%. 

The offshore Chinese yuan traded flat against the greenback. Investors eye the outcome of a US-China trade talk, which Beijing and Washington resumed as top US and Chinese officials will meet for negotiations in Stockholm on Monday to de-escalate the ongoing trade war between two of the largest economies of the world. The talk is aimed at extending the truce by three months as China is set to face the higher-than-expected reciprocal tariffs, starting Aug. 12. An extension of the tariffs would likely avert a another escalation and facilitate further meetings between Trump and his Chinese counterpart Xi Jinping late in October or early November, according to a report by Reuters.

According to the CME FedWatch tool, traders see a 96.99% probability of the US Fed keeping the rates steady. At 1022 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.65 against 97.67 Friday and 97.52 Thursday. Over the last one week, the dollar index has fallen 0.2%. The dollar remained weak as the euro, which constitutes 57.6% in the dollar index, strengthened. The Thai baht was up 0.2% and the Indonesian rupiah was down 0.1%.

The Taiwan dollar was down 0.1% against the greenback. However, losses of the currency were limited after Taiwanese consumer mood rose for the first time in five months. Taiwan's consumer confidence index increased to 64.38 in July, up from 63.7 from the previous month. The South Korean won rose 0.4% against the greenback. According to media reports, Seoul is seeking a shipbuilding partnership with Washington as a key proposal to seal a last minute agreement to avert a 25% tariff ahead of the Aug. 1 deadline. 

The Philippines peso was up 0.1% against the greenback. The Malaysian ringgit traded flat against the US unit. Malaysia's economy is expected to grow between 4.0% and 4.8% this year, underpinned by resilient domestic demand and a favourable labour market, according to Bank Negara Malaysia. "The Malaysian economy remains resilient despite global uncertainties," Bank Negara Malaysia Governor Abdul Rasheed Ghaffour said. "This is, in part, the outcome of structural reforms that we have undertaken over the years. The sustained strength in economic activity and moderate inflation provides a supportive environment to pursue structural reforms for a more resilient and competitive Malaysia in the future."  (Gowri Lakshmi)

India Rupee: Rises as risk appetite improves; mkt eyes US-China trade talks

MUMBAI – The rupee rose against the dollar Monday as investor sentiment improved on rising hopes of a US-China trade deal and because of a broadly weak dollar index, dealers said. However, the rise of the rupee was capped as importers purchased dollars, dealers said. "Nats (nationalised banks) are on bids (buying dollars), but there is movement from both sides. Moreover, market is now waiting for the US-China trade deal," a currency trader at a brokerage firm said.

Top US and Chinese officials will resume bilateral trade talks in Stockholm Monday to de-escalate the ongoing trade war between the two super power nations, and aiming to extend the truce by three months. China will face the aggressive-than-expected reciprocal tariffs starting Aug. 12, which Beijing is currently aiming to reach a durable agreement with Washington after the preliminary deals in May and June.

An extension of the tariffs would likely avert a further escalation and facilitate further meetings between US President Donald Trump and his Chinese counterpart Xi Jinping late in October or early November, according to a report by Reuters. Over the weekend, the US and the European Union struck a trade agreement, slashing Trump's threatened 30% import duty to 15% on goods from the Euro bloc.

The rupee was also supported as the dollar index remained broadly steady but weak as market braces for the US Federal Open Market Committee's decision Wednesday, where it is widely expected to keep the Federal Funds Rate target steady at 4.25-4.50%. Traders see a 96.99% chance of the US Fed maintaining status quo, according the CME FedWatch tool. At 0945 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.59, against 97.67 Friday and 97.52.

However, the rupee's gains were capped as importers bought dollars to meet their month-end payment obligations, dealers said. During the day, the rupee is seen moving in a range of 86.30-86.60 against the dollar. Dealers peg key technical resistance for the Indian unit at 86.30 a dollar.  (Gowri Lakshmi)

India Rupee: Expected range for rupee - Jul 28

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) 

End

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

Edited by Rajeev Pai

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