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Informist, Tuesday, Jul. 29, 2025

By Gowri Lakshmi and Pratiksha

MUMBAI - The rupee ended sharply lower for the third consecutive trading day on Tuesday, settling at an over four-month low against the dollar, dealers said. The rupee weakened as banks persistently purchased dollars on behalf of foreign portfolio investors and as the dollar index extended its gains and strengthened further, dealers said. However, the domestic currency was supported by some foreign fund inflows and dollar sales by the Reserve Bank of India, dealers said. 

"It's month-end, there is that pressure and there is a lot of demand from FPIs. Even though there are inflows coming, the outflows are either offsetting that positive impact or it is more signficant," a dealer at a private sector bank said. 

After falling to a low of 86.9150 a dollar, the Indian unit settled at 86.8150, sharply lower than its previous close of 86.6650. The rupee moved in a range of over 14 paise during the day. 

A fall in other Asian currencies also weighed on the rupee during the day, dealers said. Other Asian currencies fell 0.1-0.4% against the greenback due to a strong dollar index. The Taiwan dollar was the worst hit among its regional peers, followed by the Philippines' peso. The Indian currency weakened 0.2% against the dollar.

The rupee started the day on a weaker note at 86.8300 a dollar due to a rise in dollar index and crude oil prices, dealers said. The dollar index strengthened as the euro weakened after the latest trade deal between the US and the European Union. The euro constitutes 57.6% of the dollar index. The euro slumped as investors were not impressed with the latest trade deal, where the US and the Eurobloc on Sunday struck an agreement which bought the reciprocal tariffs on the bloc down to 15%, from 30% threatened earlier. 

At 1530 IST, the dollar index, which measures the strength of the dollar, against a basket of six major currencies, was at 98.76, broadly steady from 98.66 Monday and sharply up from 97.67 Friday. The index rose to an over five-week high of 99.05 during the day. 

Shortly after opening, the Indian currency hit the day's low as banks stepped in to purchase the greenback on behalf of importers, looking to meet their month-end requirements, dealers said. Some banks also bought the greenback on behalf of oil marketing companies, noting a rise in crude oil prices, they said. 

Meanwhile, state-owned banks stepped in to sell dollars, likely on behalf of the central bank around 86.90 a dollar, which limited losses for the Indian currency, dealers said. However, the RBI's intervention was not aggressive in nature, they said. 

Further, some banks bought the greenback on behalf of foreign portfolio investors, looking to pull out funds from the Indian markets, keeping the Indian unit under pressure throughout the day, according to dealers. So far in July, FPIs have withdrawn $1.09 billion from domestic markets on a net basis. 

"The decline (in rupee) is attributed to the month end demand (of dollars) from importers as also persistent demand from FPIs and muted equities," Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP said. "The RBI seems to be allowing the gradual depreciation although it was present at 86.90, a resistance which rupee needs to cross to further depreciate." 

Risk sentiment among investors has taken a beating owing to dwindling hopes of an interim trade deal between India and the US soon, resulting in persistent foreign outflows. Some importers also bought the greenback owing to fear of further depreciation in the local unit in the near term, dealers said. "The market will remain jittery till the time there is no positive news on the (India-US) trade deal front. We will continue to see the depreciation bias (on the rupee)," a dealer at a state-owned bank said. 

However, some foreign banks sold the US unit on behalf of overseas investors, looking to invest in the initial public offering of domestic companies, dealers said. This helped the Indian unit erase some of its losses. 

Shanti Gold International Ltd.'s public offer opened for subscription on Friday and will close on Tuesday. IPOs of Laxmi India Finance Ltd. and Aditya Infotech Ltd. opened Tuesday and will close Thursday. Anchor investment for the much-awaited IPO of National Securities Depository Ltd. began Tuesday. The offer will open for subscription on Wednesday and close on Friday.

Some exporters also sold the greenback, noting the relatively higher dollar/rupee levels, aiding the Indian unit, dealers said. However, most exporters remained on the sidelines, waiting for the Indian currency to fall further in the coming days, they said.

FORWARDS

The one-year dollar/rupee forward premium ended slightly lower, coming off the over two-month high it hit earlier in the day, as exporters sold dollars for forward delivery noting the relatively higher levels, dealers said.  

The one-year dollar/rupee forward premium rose to 2.08%, its highest level since May 23, earlier in the day owing to banks' forward dollar purchases, likely on behalf of importers, dealers said. Premiums also rose as banks purchased forward dollars on behalf of foreign portfolio investors, likely for public issue-related inflows, they said. 

Premiums also edged higher as traders expect surplus dollar liquidity in the system owing to the central bank giving delivery of $5 billion on its dollar/rupee buy-sell swaps maturing on Aug. 4. "The (buy-sell) swap is expected to lapse easily. We may see a sudden spike in FX swap rates but it should be all normal in few days," a dealer at another private-sector bank said. 

A slight rise in the 10-year benchmark US Treasury yield weighed on forward premiums, dealers said. Forwards of a currency pair are reflective of the interest rate differential between the two countries.

Market participants now await US Federal Open Market Committee's policy outcome due Wednesday, where it is widely expected to hold the Federal funds target range at 4.25-4.50%. At 1530 IST, the one-year exact period dollar/rupee forward premium was 2.03%, against 2.05% Monday. On an absolute basis, the premium was at 176.50 paise, against 177.48 paise Monday.  

OUTLOOK

On Wednesday, the rupee will takes cues from the movement in the dollar index and crude oil prices, dealers said. The Indian unit may come under pressure as importers are likely to purchase dollars to meet their month-end payment obligations, they said. Market participants will continue to closely monitor any development on the India-US trade deal talks.

FPIs may continue to buy the greenback to withdraw funds from the Indian markets, weighing on the Indian unit. However, traders will watch out if the central bank will intervene in the domestic spot market through dollar sales and prevent the local unit from falling beyond the pyschologically-crucial 87-per-dollar mark.

"The rise in US yields and dollar index has created pressure on the INR but a closure below 86.90 has given a hope that we can see lower levels for the dollar again. The equity markets were up today but FPIs would have still been sellers is the feel," Bhansali said. "The buying from FPIs needs to slow down and turn to positive for rupee to make some gains. The range for tomorrow (Wednesday) is 86.50 to 87.00."

Further, the rupee may continue to find support from foreign fund inflows into the initial public offerings of domestic companies, dealers said. During the day, the rupee is expected to move in a range of 86.60 to 87.00 against the greenback. Dealers peg key technical support for the rupee at 87.00 a dollar.  

India Rupee - World FX: Dollar inches up; mkt awaits FOMC meet decision Wed

India Rupee - World FX: Dollar inches up; mkt awaits FOMC meet decision Wed

MUMBAI – The dollar index inched up on higher investor confidence about trade deals after the US and the European Union agreed on a pact. At 1541 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 98.76, up from 98.66 Monday and 97.67 Friday.

Market participants await the release of the US Federal Open Market Committee meeting decision Wednesday. The FOMC is widely expected to keep the benchmark rates unchanged. Market participants also await the release of the US consumer confidence index for this month and the job openings & labor turnover survey, both due later in the day.

US and Chinese officials met Monday in Sweden for trade talks, which could culminate in both countries agreeing to extend the tariff pause by three months, reports said. Currently, China faces a deadline of Aug. 12 to reach a trade deal with the US.

US President Donald Trump said he would soon announce a new "world tariff" for countries that have not held trade negotiations with the US. He said such countries would face a tariff of 15-20%. It is above the 10% baseline tariff imposed by the US in April. "We're going to be setting a tariff for essentially the rest of the world," he said on Monday. "Because you can't sit down and make 200 deals."

The euro was steady against the dollar. A survey by the European Central Bank showed that inflation expectations fell among Eurozone consumers for the year-ahead period. Inflation expectations over the next year fell to 2.6% in June from 2.8% a month earlier, the survey showed. The Japanese yen was steady against the dollar.

The pound sterling was steady, while the Australian dollar was down 0.1% against the greenback. The Canadian dollar was steady. Market participants await developments on the trade talks between the US and Canada. Canadian Prime Minister Mark Carney said Monday that trade talks between the two countries were at an intense phase. The Swiss franc was stable against the dollar.  (Sourabh Kumar)

India Rupee: 1-yr fwd premium hits over-2-mo high on importers' fwd dlr buys

MUMBAI – The one-year dollar/rupee forward premium hit its highest level in over two months at 2.08% earlier in the day owing to banks' forward dollar purchases, likely on behalf of importers, dealers said. However, the premium erased gains and was steady as exporters sold dollars for forward delivery to take advantage of the lucrative premiums, dealers said.

"There is some good demand for dollars, including the month-end pressure and (forward) buying for IPOs (initial public offerings)," a dealer at a foreign bank said. The forward premium levels were pushed higher earlier in the day as banks also purchased forward dollars on behalf of foreign portfolio investors, likely for public issue-related flows, dealers said. 

"Banks also purchased dollars for the INR 5.00 trillion buy/sell swap by the Reserve Bank of India due Monday, where RBI is widely expected to deliver dollars," the dealer said. It is due to ample rupee liquidity in the banking system, they said. In January, the central bank undertook a $5.00-billion swap to inject rupee liquidity into the banking system. Monday, the net liquidity absorbed by the RBI--a proxy for the systemic liquidity surplus--was INR 2.24 trillion. It was INR 2.48 trillion Sunday.

A slump in the domestic currency also pushed forward premiums higher, dealers said. The rupee fell to a low of 86.9150 against the dollar, the lowest level since Mar. 13.

A slight rise in the 10-year benchmark US Treasury yield capped the rise of forward premiums, dealers said. The yield rose 2 basis points to 4.42% Monday as investors braced for the US Federal Open Market Committee's policy outcome due Wednesday, where it is widely expected to hold the Federal funds target range at 4.25-4.50%. According to the CME FedWatch tool, traders see 96.9% probability of the US central bank maintaining status quo.

"I don't think the market is priced in for a surprise cut, it's highly unlikely," the dealer at the foreign bank said. "In case of that scenario, we can expect short tenures moving up 15-20 bps and long tenures moving 10 bps higher."

At 1432 IST, the one-year exact period dollar/rupee forward premium was 2.04%, against 2.05% Monday. On an absolute basis, the premium was at 177.50 paise, against 177.48 paise Monday.  (Gowri Lakshmi)

India Rupee: Technical levels for rupee - Jul 29

MUMBAI – At 1153 IST, the rupee was at 86.8025 per dollar. At 0900 IST, the rupee was at 86.8300 a dollar, against the previous close of 86.6650. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Gowri Lakshmi and Pratiksha)

India Rupee: Sharply down on FX outflows; RBI's likely dollar sales limit fall

MUMBAI – The rupee was sharply down against the dollar, but the fall was limited as a few state-owned banks sold dollars, likely on behalf of the Reserve Bank of India, dealers said. The rupee came under pressure as some foreign banks purchased dollars for foreign fund outflows from Indian equities, dealers said. The Indian currency fell to an over four-month low of 86.9150 a dollar earlier Tuesday.

"Foreign institutional investor outflows are putting pressure (on the currency), but some intervention is seen," a dealer with a state-owned bank said. Strength of the dollar also weighed on the rupee, dealers said. The dollar index, which measures the strength of the greenback against a basket of six major currencies, was at 98.65 at 1109 IST, against 98.66 Monday and 97.67 Friday. The dollar index rose after the US and the European Union reached a trade agreement, removing the uncertainty around tariffs between the two parties.

A fall in domestic benchmark indices also weighed on the rupee, dealers said. At 1113 IST, the Nifty 50 and the BSE Sensex were down 0.1% and 0.2%, respectively.

Crude oil prices also inched up, putting pressure on the Indian unit, dealers said. At 1113 IST, the September Brent Crude contract on the Intercontinental Exchange was at $69.95 per barrel, against $70.04 per barrel Monday and $68.44 per barrel Friday.

Oil prices rose Monday on hope of better demand after a trade deal between the US and the European Union. Trump's deadline for Russia to arrive at a truce with Ukraine also lifted oil prices. Trump said on Monday that Russia had 10-12 days to make progress towards ending the war with Ukraine, or invite sanctions, including on those who buy Russian products.

Importers also purchased the greenback, noting a fall in the domestic currency, which further weighed on the rupee, dealers said. Importers also raised their dollar purchases due to month-end payment requirements, and on fears that the rupee may continue to fall, dealers said. While a few exporters sold the greenback, most others waited for the rupee to fall further before selling dollars in a large quantum, dealers said.

Market participants now await a rate decision by the US Federal Open Market Committee Wednesday, when it is widely expected to keep the benchmark interest rate unchanged. According to CME FedWatch tool, the odds of a rate cut by the US Fed Wednesday are seen just 3.1%. During the day, the rupee is seen moving in a range of 86.50 and 86.90 a dollar. Dealers peg key technical support for the Indian unit at 86.90 against the greenback.  (Sourabh Kumar)

India Rupee: Falls sharply on rise in dollar index, crude oil prices

MUMBAI – The rupee fell sharply against the dollar Tuesday due to strengthening of the dollar index and a rise in crude oil prices, dealers said. "Dollar is now on a strong foot hold; it will be difficult for the rupee in the first half, maybe later in the day we can expect some appreciation (of the rupee)," a dealer at a private sector bank said. The Indian unit fell to a near six-week low of 86.8725 a dollar, shortly after the currency market opened. 

The dollar index extended its gains from Monday as the euro plunged against the US currency after investors assessed the latest US-European Union trade deal, dealers said. On Sunday, the US and the Euro block struck a trade agreement, bringing tariffs on the block down to 15% from the 30% import duty threatened by US President Donald Trump earlier. However, the trade deal failed to impress investors and the euro weakened against the dollar. 

At 0917 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.69, broadly steady from 98.66 Monday but sharply higher than 97.67 Friday. The dollar index hit a near two-week high of 98.71 in early Asian trade. 

The rupee was also weighed down as oil marketing companies rushed to purchase the greenback, fearing further rise in crude oil prices amid heightened geopolitical tensions between the US and Russia, dealers said. Crude oil prices rose 2% Monday after Trump said he would shorten the deadline to 10-12 days for Russia to make progress in finding a ceasfire in the three-and-a-half year long war with Ukraine. Trump announced Russia would face sanctions and consequences if a ceasefire is not reached soon. At 0922 IST, the September Brent Crude contract on the Intercontinental Exchange was at $70.07 per barrel, against $70.04 per barrel Monday and $68.44 per barrel Friday.

Dealers expect the rupee to get some support from likely foreign fund inflows relating to the initial public offerings of domestic companies. 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 seen moving in a range of 86.50 and 86.90 a dollar. Dealers peg key technical support for the Indian unit at 86.90 against the greenback.  (Gowri Lakshmi)

India Rupee - Asia FX: Most down; Thai baht up after ceasefire with Cambodia

MUMBAI – Most Asian currencies fell against the dollar Tuesday due to a rise in the dollar index. The dollar strengthened Monday after the US and the European Union reached a trade agreement, removing the uncertainty around tariffs. The dollar index, which measures the strength of the greenback against a basket of six major currencies, was 98.62 at 0823 IST, against 98.66 Monday and 97.67 Friday.

Market participants are now looking forward to the ongoing US-China trade talks in Sweden. Reports indicate the two countries might reach an agreement to extend the tariff pause for three months. Investors also await the US Federal Open Market Committee's decision on Wednesday; the panel is widely expected to keep the benchmark rate unchanged.

US President Donald Trump Monday said he would soon announce a new "world tariff" for countries that do not hold trade negotiations with the US. He said such countries would face a tariff of 15-20%. This is above the 10% baseline tariff imposed by the US in April. 

The Taiwan dollar was down 0.1% against the greenback due to a rise in the dollar index. A fall in The Taiwan Stock Exchange Capitalization Weighted Stock Index also weighed on the currency. The benchmark index was down 0.8% in early trade Tuesday. The South Korean won fell 0.1% against the greenback. 

The Philippines peso was down 0.1% against the dollar. The currency came under pressure after Philippines' central bank governor Monday said the benchmark rate would be cut twice this year. He, however, did not give a timeline and said it would depend on economic growth and inflation. 

The Indonesian rupiah and the Malaysian ringgit were each down 0.1% against the US currency due to a rise in the dollar index. Defying the trend, the Thai baht rose 0.1% against the greenback. Thailand and Cambodia agreed to a ceasefire on Monday after days of fighting. Reports citing Thailand's army indicate that the Cambodian army violated the ceasefire early Tuesday.  (Sourabh Kumar)

India Rupee: Expected range for rupee - Jul 29

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

(Gowri Lakshmi)

End

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

Edited by Avishek Dutta and Vandana Hingorani

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