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Informist, Friday, Aug. 8, 2025

By Pratiksha

MUMBAI – The rupee ended off its day's high against the dollar Friday as banks bought the greenback on behalf of importers and foreign portfolio investors, dealers said. However, the Reserve Bank of India likely ensured the Indian unit does not fall and remain well supported, dealers said.  

"Equity outflows are, of course, going to be there till the time trade tensions (between India and the US) persist," a dealer at a foreign bank said. "Importers also found these levels quite attractive."

After touching a high of 87.5150 a dollar, the Indian currency settled at 87.6600 on Friday, as against 87.7025 on Thursday. The Indian unit emerged as the best performer amongst its Asian peers, which fell between 0.1% and 0.4% against the dollar. 

The rupee opened sharply higher against the dollar as traders likely unwound their long dollar positions in the offshore non-deliverable forwards market, noting the Reserve Bank of India's active intervention through dollar sales in the spot market in recent trading sessions, dealers said. Some dealers said the dollar sales in the NDF market could also be attributed to foreign fund flows into an Indian corporate, which in turn supported the Indian currency. 

However, shortly after opening, the Indian currency started paring its gains as state-owned banks stepped in to buy dollars on behalf of importers, looking to take advantage of the relatively lower dollar/rupee levels, dealers said. "Importers got a good opportunity in the morning to buy (dollars)," a dealer at a private-sector bank said. "In general, also, the buying pressure has been intact on the rupee this week." 

Further, risk aversion among FPIs prompted them to pull out funds from Indian equities, which also weighed on the Indian unit, dealers said. Investors' risk appetite has taken a beating owing to escalating trade tensions between the US and India after US President Donald Trump's recent tariff measures on New Delhi. Trump on Wednesday slapped an additional 25% tariff on Indian goods, on top of a 25% tariff announced previously, citing New Delhi's continued purchases of Russian oil. So far in August, FPIs have withdrawn $1.34 billion from local equities. On Friday, both the Nifty 50 and Sensex ended 1% lower each. 

Meanwhile, some banks stepped in to sell dollars around the day's low of 87.7450, likely on behalf of the central bank, which supported the local unit, dealers said. The RBI's intervention, however, was not aggressive in nature, they said.

"The rupee was back to its yesterday's (Thursday) levels but the movement was still contained and we did not see any sharp moves," a dealer at a state-owned bank said. "It is clear to the market at this point that the RBI does not want the all-time low to breach." The rupee fell to a record low of 87.9500 a dollar on Feb. 10. 

The dollar index remained broadly weak, falling 0.4% this week, as concerns over softening US labour market boosted hopes of rate cuts by the Federal Reserve. At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.25, against 98.05 Thursday and 98.19 Wednesday. The index fell to a low of 97.95 on Thursday.

FORWARDS

The one-year dollar/rupee forward premium ended at an over 12-week high, tracking a sharp rise in the dollar/rupee overnight swap rate, or cash-tom, dealers said. The implied overnight cost of deploying dollars through foreign exchange swaps was around 6% on Friday. "The cash-tom shot up due to two VRRR (variable rate reverse repo) auctions taking place in one day. Due to that, a lot of dollar was taken out," a dealer at another foreign bank said.

The Reserve Bank of India held a three-day and a six-day variable rate reverse repo auction for INR 1.00 trillion and INR 2.00 trillion, respectively, on Friday. The central bank accepted offers worth INR 130.45 billion for the three-day auction and INR 1.46 trillion for the six-day auction. 

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

Market participants see strong support for the one-year dollar/rupee forward premium at 2.10%. At 1530 IST, the one-year exact period dollar/rupee premium was 2.08%, against 2.06% Thursday. On an absolute basis, the premium was at 182.27 paise, against Thursday's 180.71 paise.

OUTLOOK

On Monday, the rupee will take cues from any further development on the US tariff front and movement in the dollar index, dealers said. The Indian unit will also track movement in crude oil prices. 

"Any positive breakthrough on the trade front could trigger a reversal in rupee weakness," Jateen Trivedi, VP research analyst - commodity and currency at LKP Securities, said. "The currency is expected to trade in the range of 87.40 to 87.95."

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.

"RBI has kept the rupee around 87.70-87.80. We are expecting that the cap will be protected next week as well. Unless something flares up on the tariff front," a dealer at another private-sector bank said. 

During the day, the rupee is expected to move in a range of 87.50 to 87.90 a dollar. Dealers peg key technical support for the rupee at 88.00 a dollar and resistance at 87.50.

India Rupee - World FX: Pound sterling up as BoE cuts after narrow 5-4 vote

MUMBAI – The pound sterling extended its gains from Thursday and was up 0.1% against the dollar as as the Bank of England cut interest rates but only after a narrow 5-4 vote, indicating that the central bank remained concerned about still high inflation, even as it cut rates. 

The Bank of England's Monetary Policy Committee Thursday lowered its bank rate by 25 basis points to 4.00%. Following the decision, the pound sterling ended 0.7% higher on Thursday.   

The dollar index edged slightly higher in European trade after falling on Thursday. US President Donald Trump on Thursday said he would nominate Council of Economic Advisers Chairman Stephen Miran to serve out the final few months of a newly vacant seat at the Federal Reserve while the White House seeks a permanent addition to the central bank's governing board, weighing on the greenback. Miran replaces Governor Adriana Kugler following her surprise resignation last week.

At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.25, against 98.05 Thursday and 98.19 Wednesday. The index fell to a low of 97.95 on Thursday. 

The euro was down 0.2% against the dollar and the yen was down 0.3% even after minutes of Bank of Japan's July meeting showed policymakers debated the likelihood of resuming interest rate increases with one signalling the chance of a hike this year. Both the Australian dollar and the New Zealand dollar were steady against the greenback. (Pratiksha)  

India Rupee: 1-year forward premium hits 11-wk high as cash-tom rate rises

MUMBAI – The one-year dollar/rupee forward premium rose to an 11-week high, tracking a sharp rise in the dollar/rupee overnight swap rate, or cash-tom, dealers said. The implied overnight cost of deploying dollars through foreign exchange swaps was around 6% on Friday. "People parked a lot of dollars for the VRRR (variable rate reverse repo) biddings, which caused the cash-tom to shoot up," a dealer at a foreign bank said. 

The Reserve Bank of India held a three-day and a six-day variable rate reverse repo auction for INR 1.00 trillion and INR 2.00 trillion, respectively, on Friday. The central bank accepted offers worth INR 130.45 billion for the three-day auction and INR 1.46 trillion for the six-day auction. 

Further, some banks purchased dollars for forward delivery, likely to take advantage of the arbitrage opportunity between onshore forward and offshore non-deliverable forward rates, dealers said. "There is some offshore arbitrage related paying and cash-tom is elevated as well," a dealer at a private-sector bank said. 

Market participants see strong support for the one-year dollar/rupee forward premium at 2.10%. At 1500 IST, the one-year exact period dollar/rupee premium was 2.08%, against 2.06% Thursday. On an absolute basis, the premium was at 182.08 paise, against Thursday's 180.71 paise. (Pratiksha)

India Rupee: Gives up all gains as banks buy dollars for importers, FPIs

MUMBAI – The rupee gave up all its early gains and was steady against the dollar Friday as banks bought the greenback on behalf of importers and foreign portfolio investors, dealers said. The Indian currency touched a high of 87.5150 a dollar earlier in the day. "This was expected. Rupee has not been able to hold on to its gains for most days. The depreciation bias is there," a dealer at a state-owned bank said. "But I think for now, it will consolidate around 87.70 (a dollar)."

Banks bought the greenback on behalf of importers, looking to make the most of the relatively lower dollar/rupee levels, which weighed on the rupee, dealers said. Further, risk aversion among FPIs prompted them to pull out funds from Indian equities, which also weighed on the Indian unit, dealers said. Investors' risk appetite has taken a beating owing to escalating tensions between the US and India after US President Donald Trump's recent tariffs on New Delhi. So far in August, FPIs have withdrawn $714.05 million from local equities. 

Meanwhile, weakness in the dollar index provided support to the Indian unit, according to dealers. At 1355 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.10, against 98.05 Thursday and 98.19 Wednesday. The index fell to a low of 97.95 on Thursday. 

The rupee had risen sharply at open as traders likely unwound their long dollar positions in the offshore non-deliverable forwards market, dealers said. During the day, the rupee is seen moving in a range of 87.50 to 87.80 against the dollar. Dealers peg key technical support for the rupee at 87.80 a dollar. (Pratiksha)

India Rupee: Technical levels for rupee - Aug 8

MUMBAI – At 1120 IST, the rupee was at 87.6100 per dollar. At 0900 IST, the rupee was at 87.5600 a dollar, against the previous close of 87.7025. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Pratiksha)

India Rupee: Rises as traders likely unwound long dollar bets in NDF market

MUMBAI – The rupee opened higher against the dollar Friday as traders likely unwound their long dollar positions in the offshore non-deliverable forwards market, noting the Reserve Bank of India's active intervention through dollar sales in the spot market in recent trading sessions, dealers said. 

On Thursday, the rupee came out unscathed from the impact of US President Donald Trump's latest tariff imposition on India and ended steady against the dollar, likely due to the RBI's active support, dealers said. "It looks like the RBI's intervention ensured long (dollar positions) cutting in the offshore market," a dealer at a foreign bank said. Earlier this week, the RBI had also marked its presence in the NDF market to support the rupee. 

Further, some dealers said the dollar sales in the NDF market might also have been on account of foreign fund flows into an Indian corporate, which supported the Indian currency. The Indian currency was also supported by weakness in the dollar index, dealers said. The dollar index fell on Thursday as the pound sterling rose sharply after the Bank of England cut interest rates by 25 basis points but only with a narrow 5-4 vote, indicating that the central bank remained concerned about still high inflation, even as it cut rates. At 0940 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.11, against 98.05 Thursday and 98.19 Wednesday. The index fell to a low of 97.95 on Thursday. 

Meanwhile, some banks stepped in to buy dollars on behalf of importers, looking to take advantage of the relatively lower dollar/rupee levels, which limited gains for the Indian unit, dealers said. "Given the prevailing conditions, the rupee may attempt a pullback toward the 87.50 range in the near term," Amit Pabari, managaing director at CR Forex, said in a note. "Immediate support lies at 87.20—a decisive break below this level would be needed to signal a meaningful shift in trend."

During the day, the rupee is seen moving in a range of 87.50 to 87.80 against the dollar. Dealers peg key technical resistance for the rupee at 87.50 a dollar. (Pratiksha)

India Rupee - Asia FX: Most steady as dlr index stable; Philippine peso up

MUMBAI – Most Asian currencies were steady against the dollar Friday as the dollar index remained broadly stable in early trade after falling on Thursday. The dollar index weakened as the pound sterling rose sharply after the Bank of England cut interest rates by 25 basis points but only with a narrow 5-4 vote, indicating that the central bank remained concerned about still high inflation, even as it cut rates.

Further, US President Donald Trump on Thursday said he will nominate Council of Economic Advisers Chairman Stephen Miran to serve out the final few months of a newly vacant seat at the Federal Reserve while the White House seeks a permanent addition to the central bank's governing board, weighing on the greenback. Miran replaces Governor Adriana Kugler following her surprise resignation last week. At 0910 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.12, against 98.05 Thursday and 98.19 Wednesday. 

The Malaysian ringgit, the Thai baht and the Chinese yuan were all flat against the dollar. Rating agency S&P Global on Thursday affirmed China's long-term credit rating at A+ and said its strong fiscal stimulus will keep economic growth resilient amid headwinds from the property sector and tariff pressures. S&P said the outlook on China's rating is "stable." The Indonesian rupiah was also steady against the dollar. 

Bucking the trend, the South Korean won was down 0.2% against the dollar, tracking losses in local equities. The country's central bank governor said on Thursday that South Korea's trade deal with the US will "take a huge burden off" monetary policymakers at their upcoming meeting later this month. The country's Finance Minister Koo Yun-cheol visited the US last week and clinched a trade deal with Trump that set import tariffs on South Korean goods at 15%.  

The Philippine peso rose 0.1% against the dollar, bouyed by the latest robust GDP print. Data showed on Thursday that the Philippine economy grew at its fastest annual pace in a year in Apr-Jun. The Philippine economy grew by 5.5% in Apr-Jun from a year earlier, compared to the previous quarter's 5.4% expansion. Economists in a Reuters poll had expected growth of 5.4%. (Pratiksha) 

India Rupee: Expected range for rupee - Aug 8

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: 

(Pratiksha) 

End

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

Edited by Saji George Titus

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