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Informist, Tuesday, Aug. 5, 2025

 

By Pratiksha and Kabir Sharma

 

MUMBAI – The rupee ended at a record closing low against the dollar Tuesday after US President Donald Trump threatened to substantially raise tariffs on India for its continued procurement of crude oil from Russia. However, dollar sales by the Reserve Bank of India prevented the Indian currency from falling to a record low, dealers said. 

 

"After Trump's news, today was expected to be volatile, but that was not really the case. Rupee was in a range for the whole day, only because of RBI," a dealer at a private-sector bank said. "They (RBI) ensured the moves in rupee contained."

 

The Indian currency was also weighed down by banks' dollar purchases for foreign portfolio investors and importers, dealers said. After moving in a range of 14 paise, the rupee ended at 87.8000 a dollar Tuesday, down 0.2% from Monday. 

 

The rupee started the day sharply lower against the dollar at 87.8500 after Trump on Monday threatened steeper tariffs on India. The latest announcement came after Trump on Wednesday announced a 25% tariff on Indian goods shipped to the US, along with an additional penalty for India's procurement of military equipment and energy from Russia. 

 

Outflows from Indian equities due to risk aversion among the investors post the tariff threat also weighed on the rupee, dealers said. The Nifty 50 and the Sensex ended 0.3% and 0.4% lower, respectively. 

 

"We can't call it panic, not yet. Importers are cautious and are stocking up on dollars on every down tick as they are expecting major rise in the dollar going forward," a dealer at a state-owned bank said. Importers' dollar buys further put pressure on the rupee and took it to the day's low of 87.8875 against the dollar. 

 

The Indian unit would have breached the all-time record low level of 87.9500 a dollar on Tuesday, had it not been for the Reserve Bank of India's likely dollar sales in the offshore market as well as the spot market, dealers said. Dollar sales by the central bank may just have protected the rupee from falling beyond the psychologically crucial 88-per-dollar mark, they said. The central bank's intervention in the spot market was aggressive in nature, according to dealers.

 

"See it was expected that RBI will be there around these levels, but maybe the extent of it was not known," a dealer at a private-sector bank said. "But even after today, I am not sure if RBI will continue protecting these levels heavily in future."

 

A recovery in the dollar index after the slump seen on Monday also weighed on the Indian currency, dealers said. Dollar index recovered on Tuesday after the euro and the yen, the two major constituents, fell against the greenback. At 1614 IST, the dollar index, which measures the strength in the dollar against a basket of six major currencies, was at 99.02, against 98.73 Monday and 98.69 Friday. 

 

	AT 1530 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	87.8000	87.8500	87.7525	87.8875	87.6550
1-year dlr/rupee fwd (paise)	177.70	179.45	179.95	177.40	178.89

 

FORWARDS

The one-year dollar/rupee forward premium ended slightly lower as some exporters likely sold dollars for forward delivery, noting a sharp fall in the rupee, dealers said. Meanwhile, most traders remained cautious ahead of the outcome of the Reserve Bank of India's Monetary Policy Committee meeting on Wednesday, they said. Forwards of a currency pair are reflective of the interest rate differential between the two countries.

 

While most market participants expect the rate-setting panel to stay pat on rates, some are of the view that with inflation at a six-year low, looming worries over slowing economic growth, which have been aggravated with the announcement of tariffs by US President Trump, there are chances the panel may opt for a rate cut this time as well. In June, the Monetary Policy Committee had cut the repo rate by a larger-than-expected 50 basis points and changed the stance to neutral from accommodative. 

 

Further, some banks purchased dollars for forward delivery in order to take advantage of the arbitrage opportunity between onshore forward premiums and offshore non-deliverable forward premiums, supporting premiums, dealers said. 

 

At 1530 IST, the one-year exact period dollar/rupee forward premium was 2.02%, against Monday's close of 2.04%. On an absolute basis, the premium was at 177.70 paise, against 178.89 paise Monday.

 

OUTLOOK

On Wednesday, the rupee may open steady as traders may turn cautious ahead of the outcome of the Reserve Bank of India's Monetary Policy Committee meeting at 1000 IST, dealers said. "If RBI throws a surprise tomorrow (Wednesday), rupee will see sharp moves. If there is a rate cut, 88 (a dollar) should be a done deal," a dealer at another private-sector bank said. Market participants will also watch out for RBI Governor Sanjay Malhotra's comments on rupee, system liquidity and US tariffs.

 

They will also closely monitor developments on the US tariff front. The local unit will also take cues from overnight movement in the dollar index after the release of the US July US Services PMI, later in the day, dealers said. The domestic unit is also expected to take cues from movement in crude oil prices, they said. 

 

The local unit may continue to be weighed down by dollar purchases on behalf of FPIs, looking to withdraw funds from the Indian markets, as risk aversion looms large among investors, dealers said. However, they expect the central bank to intervene in the domestic spot market and offshore non-deliverable forwards market through dollar sales to prevent the local unit from falling beyond the psychologically crucial 88-per-dollar mark.

 

"The ongoing friction between the US and India on trade and energy is likely to keep the rupee volatile and under pressure. The rupee is expected to trade in the 87.40–88.25 range," Jateen Trivedi, VP research analyst - commodity and currency at LKP Securities, said in a note. 

 

During the day, the rupee is expected to move in a range of 87.60 to 88.00 a dollar. Dealers peg immediate key technical support for the rupee at 88.00 a dollar.

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India Rupee - World FX: Yen falls 0.4?ter BoJ policy minutes; euro down

 

	AT 1435 IST	HIGH	LOW	PREVIOUS
GBP/USD	1.3282	1.3303	1.3260	1.3283
EUR/USD	1.1534	1.1589	1.1530	1.1566
NZD/USD	0.5888	0.5922	0.5884	0.5906
AUD/USD	0.6454	0.6479	0.6450	0.6463
USD/JPY	147.5880	147.6350	146.6280	147.1100
USD/CAD	1.3806	1.3810	1.3764	1.3773
EUR/JPY	170.2350	170.2800	169.8180	170.1150
CHF/USD	1.2327	1.2395	1.2318	1.2364
EUR/CHF	0.9355	0.9361	0.9340	0.9346

 

MUMBAI – The Japanese yen fell 0.4% against the dollar after Bank of Japan's June policy meeting minutes on Tuesday showed many members agreed the central bank must keep interest rates steady due to downside risks to the economy from US tariffs. However, some policymakers saw scope to resume interest rate hikes once trade issues owing to US tariffs faded.

 

Meanwhile, data released Tuesday showed Japan's service sector activity rose at the fastest pace in five months in July. The S&P Global final Japan services purchasing managers' index rose to 53.6 in July from 51.7 in June. A PMI reading above 50.0 indicates growth in activity, while that below the threshold points to contraction.

 

Further, euro fell 0.2% against the dollar even after business activity in the eurozone grew at a slightly faster pace in July from the previous month. The HCOB Eurozone composite PMI, compiled by S&P Global, rose to 50.9 in July from 50.6 in June. 

 

Germany's services sector also gained momentum in July, with the HCOB final services PMI rose to 50.6 in July from 49.7 in June. Spain's services sector also saw a considerable boost last month. The HCOB Spain services PMI business activity index jumped to 55.1 in July from 51.9 in June, marking the highest level since February. 

 

The dollar index edged slightly higher, recovering from the downturn it saw after a soft US jobs report on Friday. At 1435 IST, the dollar index, which measures the strength in the dollar against a basket of six major currencies, was at 99.02, against 98.73 Monday and 98.69 Friday.

 

The pound sterling fell 0.1% against the dollar after the UK's July's S&P Global Purchasing Managers' Index for the services sector declined to 51.8 from June's 52.8. The Australian dollar and the New Zealand dollar were down 0.1% and 0.3% against the dollar, respectively, tracking a rise in the dollar index. (Pratiksha) 

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India Rupee: Remains sharply down on FPI outflows; RBI prevents record low

 

	AT 1255 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	87.8400	87.8500	87.7525	87.8875	87.6550

 

MUMBAI – The rupee remained sharply down against the dollar as investor sentiment took a beating after US President Donald Trump Monday threatened steeper tariffs on India, resulting in foreign portfolio outflows, dealers said. However, the Reserve Bank of India's active intervention through dollar sales kept the Indian currency from falling further, they said. 

 

Trump threatened to "substantially" raise tariffs on India for the country's continued energy procurement from Russia. The fresh announcement came after Trump last week announced a 25% tariff on Indian goods shipped to the US, along with an additional penalty for India's procurement of military equipment and energy from Russia.

 

Banks bought the greenback on behalf of FPIs, looking to withdraw funds from Indian markets, which weighed on the Indian unit, according to dealers. At 1255 IST, both the Sensex and Nifty 50 were down 0.4?ch. 

 

Further, some banks bought the greenback on behalf of importers, who fear a further depreciation in the domestic unit going ahead, which also weighed on the rupee, dealers said. The rupee fell to a low of 87.8875 a dollar during the day. "These levels have naturally spooked the importers. So they are trying to buy (dollars) on every dip (in dollar/rupee)," a dealer at a private-sector bank said. 

 

However, the central bank actively supported the rupee through its dollar sales intervention, preventing it from hitting a record low, dealers said. The Indian currency fell to a lifetime low of 87.9500 a dollar on Feb. 10. The RBI's intervention in the spot market was likely aggressive in nature, they said, adding that they expect the rupee to remain well supported around 87.85 throughout the day. "There's a lot of demand (for dollars) in the market, but it is not reflecting in levels as the RBI is very much present," a dealer at a foreign bank said. 

 

 

During the day, the rupee is seen moving in a range of 87.70 to 88.00 against the dollar. Dealers peg key technical support for the rupee at 88.00 a dollar. (Pratiksha)

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India Rupee: 1-yr forward premium steady on caution ahead of MPC outcome

 

	AT 1200 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	87.7900	87.8500	87.7525	87.8875	87.6550
1-year dlr/rupee fwd (paise)	178.45	179.45	179.95	177.61	178.89

 

MUMBAI – The one-year dollar/rupee forward premium was largely steady as traders remained cautious ahead of the outcome of the Reserve Bank of India's Monetary Policy Committee meeting on Wednesday, dealers said. Forwards of a currency pair are reflective of the interest rate differential between the two countries.

 

While most market participants expect the rate-setting panel to stay pat on rates, some are of the view that, with inflation at a six-year low, looming worries over slowing economic growth, which have been aggravated with the announcement of tariffs by US President Donald Trump, there are chances the panel may opt for rate cut this time as well. In June, the Monetary Policy Committee had cut the repo rate by a larger-than-expected 50 basis points and changed the stance to neutral from accommodative. 

 

"Forwards have consolidated ahead of the RBI policy. People have not yet fully priced in the rate cut view, but seems like it can happen," a dealer at a private-sector bank said. "I think we will see large moves in levels after the policy tomorrow (Wednesday)." 

 

Further, some banks purchased dollars for forward delivery in order to take advantage of the arbitrage opportunity between onshore forward premiums and offshore non-deliverable forward premiums, supporting premiums, dealers said. "For the last few days we are seeing arbitrage paying. That has continued today as well," a dealer at a state-owned bank said. 

 

Further, a sharp fall in the rupee, prompted some banks to buy dollars for forward delivery, supporting forward premiums, dealers said. The rupee fell to a low of 87.8875 a dollar earlier in the day, compared to 87.6550 on Monday as US President Donald Trump Monday threatened to "substantially" raise tariffs on India for the country's continued energy procurement from Russia, dealers said.  

 

At 1200 IST, the one-year exact period dollar/rupee forward premium was 2.03%, against Monday's close of 2.04%. On an absolute basis, the premium was at 178.45 paise, against 178.89 paise Monday. (Pratiksha) 

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India Rupee: Technical levels for rupee - Aug 5

 

MUMBAI – At 1030 IST, the rupee was at 87.7550 per dollar. At 0900 IST, the rupee was at 87.8500 a dollar, against the previous close of 87.6550. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

 

Participants	S2	S1	R1	R2
Private-sector bank	88.20	88.00	87.20	87.00
Brokerage firm	88.20	87.97	87.50	87.20
Brokerage firm	88.10	88.00	87.55	87.20

 

(Pratiksha)

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India Rupee: Sharply down as Trump warns bigger India tariff; RBI caps fall

 

	AT 0925 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	87.8300	87.8500	87.7825	87.8650	87.6550

 

MUMBAI – The rupee fell sharply against the dollar as US President Donald Trump Monday threatened to "substantially" raise tariffs on India for the country's continued energy procurement from Russia, dealers said.

 

The fresh announcement came after Trump on Wednesday announced a 25% tariff on Indian goods shipped to the US, along with an additional penalty for India's procurement of military equipment and energy from Russia. After the fresh tariff announcement, India on Monday said it has been targeted by the US and the European Union for importing oil from Russia after the commencement of the Ukraine conflict.

 

However, losses in the Indian currency were limited as the Reserve Bank of India likely stepped in to sell dollars in the offshore non-deliverable forwards market, dealers said. The rupee was trading around 88.04 a dollar in the offshore NDF market before opening at 87.8500 a dollar in the spot market, thanks to the likely intervention by the central bank, dealers said. "RBI is trying to strike a balance I guess. They are letting rupee absorb some of the tariff impact but are also stopping out volatility," a dealer at a state-owned bank said. 

 

The RBI likely intervened in offshore to prevent the Indian unit from falling beyond the psycologically-crucial 88-per-dollar mark and hitting a record low, according to dealers. The rupee hit a lifetime low of 87.9500 a dollar on Feb. 10. Further, the central bank likely intervened through dollar sales in the spot market as well to support the Indian unit, dealers said.  

 

"I think RBI will try to cap rupee around 87.80-87.90 but if that breaks, 88 can happen. Broader support is seen around 88.20-88.25," a dealer at another state-owned bank said. 

 

Following the latest tariff announcement, dealers expect strong foreign portfolio outflows from the Indian market weighing on the Indian currency during the day. They also expect importers to step in to purchase dollars on fear that the Indian currency may depreciate further in the coming days.

 

During the day, the rupee is seen moving in a range of 87.60 to 88.10 against the dollar. Dealers peg key technical support for the rupee at 88.00 a dollar. (Pratiksha)

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India Rupee - Asia FX: Most up as dollar index remains weak; yuan steady

 

MUMBAI – Most Asian currencies rose against the dollar as the dollar index remained broadly weak after a soft US jobs report on Friday prompted investors to ramp up bets of imminent Fed rate cuts. Traders are now betting on an 92.5% probability for a September rate cut by the Fed compared with 37.7?fore the US jobs data, according to CME Group's FedWatch tool. 

 

At 0900 IST, the dollar index, which measures the strength in the dollar against a basket of six major currencies, was at 98.82, against 98.73 Monday and 98.69 Friday. Meanwhile, US President Donald Trump Monday threatened to raise tariffs on India over Russian oil purchases. On Wednesday, Trump had announced a 25% tariff on Indian goods.  

 

The Malaysian ringgit was up 0.2% against the dollar, the most among its Asian peers, while the Thai baht was up 0.1%. The Indonesian rupiah rose 0.1% against the greenback. 

 

Bucking the trend, the Chinese yuan and the Philippine peso were broadly steady. Data released Tuesday showed China's services activity expanded at its fastest pace in 14 months in July. The S&P Global China General Services PMI rose to 52.6 in July from 50.6 the previous month. A level below 50 denotes contraction and one above 50 shows expansion.

 

Further, data released Tuesday showed Philippine's inflation rose to its slowest pace in nearly six years in July as utility costs moderated and food prices dropped, opening space for the central bank to cut interest rates later this year. The consumer price index rose 0.9% year on year, the lowest rate since October 2019, and below the 1.1% median forecast in a Reuters poll. The July figure was also less than June's 1.4%.

 

The South Korean won was down 0.2% against the dollar after data released Tuesday South Korea's consumer prices rose 2.1% in July from a year earlier, slightly slower than the rise of 2.2% in June. (Pratiksha) 

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India Rupee: Expected range for rupee - Aug 5

 

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: 

 

PARTICIPANT	SUPPORT	RESISTANCE
Private sector bank	88.00	87.50
Private sector bank	88.30	87.80
Private sector bank	88.20	87.90
Foreign bank	88.25	87.60
Brokerage firm	88.05	87.80
Brokerage firm	88.25	87.50
Brokerage firm	88.05	87.65

 

 

 

 

 

 

 

 

 

 

(Pratiksha)

 

End

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

 

 

Edited by Akul Nishant Akhoury and Vandana Hingorani

 

 

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