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Informist, Monday, Aug. 11, 2025

By Pratiksha

NEW DELHI – The rupee erased all earlier gains and ended flat against the dollar Monday as banks bought the greenback on behalf of importers and foreign portfolio investors, dealers said. However, a weak dollar index and foreign inflows linked to initial public offerings kept the Indian unit supported, they said.   

"It was just another day of rupee gaining, but the depreciation bias was playing out eventually," a dealer at a state-owned bank said. "There is good buying (for dollars) in general in the market."

After hitting a high of 87.4825 a dollar, the Indian unit settled at 87.6600 on Monday, the same as on Friday. The rupee moved in a range of 19 paise during the day. 

The rupee started the day on a positive note, opening sharply higher against the dollar, as traders likely unwound their long dollar positions in the offshore non-deliverable forwards market, looking at the Reserve Bank of India's active intervention through dollar sales in the spot market in recent trading sessions, dealers said.

The central bank has been actively intervening in both the offshore NDF and the spot market in recent sessions to prevent the rupee from depreciating sharply in the face of US President Donald Trump's tariff blow to India. 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.

Shortly after opening, the Indian currency started erasing its gains as state-owned and private-sector banks stepped in to buy dollars on behalf of importers, looking to take advantage of the relatively lower dollar/rupee levels, dealers said. "Importers at this point are looking just for a good buying (of dollars) opportunity. So buy on dips (in dollar/rupee) is happening," a dealer at a private-sector bank said. So far in August, the rupee has depreciated 0.3% against the dollar. 

Further, some banks bought the greenback on behalf of foreign portfolio investors, looking to pull out funds from Indian markets, which also weighed on the Indian unit, dealers said. So far in August, FPIs have withdrawn $862.11 million from domestic markets, on a net basis. "Risk sentiment is not so good with the whole tariff saga. We are seeing outflows in both debt and equity," a dealer at a foreign bank said. 

However, some banks sold the greenback on behalf of overseas investors, likely looking to invest in the initial public offering of BlueStone Jewellery and Lifestyle Ltd., which supported the Indian unit, dealers said. The company's public offer opened Monday and will close Wednesday.

Meanwhile, some traders remained cautious and refrained from placing large bets ahead of the release of the key US inflation data, due Tuesday, dealers said. The US CPI for July is expected to have risen 2.8% on an annual basis, according to a Reuters poll, against a 2.7% rise in June. While recent weak economic data in the US has led to expectations of a rate cut by the US Federal Reserve in September, higher-than-expected inflation could undermine those expectations. 

The dollar index remained broadly weak on growing expectations of a rate cut in the US, supporting the Indian currency, dealers said. Fed funds futures traders are now pricing in an 89% probability of a 25-basis-point cut at the Fed's September meeting, according to the CME FedWatch Tool. At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.26, against 98.27 Friday and 98.05 Thursday.

FORWARDS

The one-year forward premium ended at an over 11-week high as the Reserve Bank of India drained INR 447.90 billion of liquidity from the banking system through a variable rate reverse repo auction, dealers said. In the three-day variable rate reverse repo auction Monday, banks parked INR 447.90 billion with the central bank, against a notified amount of INR 500 billion. 

Further, some banks entered into dollar-rupee sell/buy swaps in near-term segments of the forwards market ahead of the initial public offerings of some domestic companies, which boosted the near-term forward premiums. Near-term sell/buy swaps, which entail selling dollars for immediate delivery and buying them back at a future date, are used to deploy dollars for short durations. 

Market participants now await key US inflation data, due Tuesday, for further cues on the Federal Reserve's rate trajectory. Forwards of a currency pair are reflective of the interest rate differential between two countries.

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 2.09%, against 2.08% Friday. On an absolute basis, the premium was 182.84 paise, against 182.27 paise Friday. 

OUTLOOK

On Tuesday, the rupee will take cues from movement in the dollar index and crude oil prices, dealers said. Some dealers expect the unwinding of long dollar bets to continue in the offshore NDF market, based on the activity in the last few sessions, which may support the Indian unit at open. 

Further, most traders may avoid placing heavy bets ahead of the release of the US inflation data, later on Tuesday, dealers said. "Traders now turn their focus to this week's US CPI and Core PCE data, which could set the tone for dollar moves. Any progress in tariff negotiations between the US and India is likely to offer further support to the rupee," Jateen Trivedi, vice-president research analyst - commodity and currency at LKP Securities, said in a note. 

The Indian unit may continue to be weighed down by foreign portfolio outflows, 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.

During the day, the rupee is expected to move in a range of 87.40 to 87.90 a dollar. Dealers peg technical support for the rupee at 87.80 a dollar and resistance at 87.40.

India Rupee - World FX: Australian dollar down ahead of policy decision Tue

NEW DELHI – The Australian dollar fell 0.1% against the dollar ahead of the Reserve Bank of Australia's policy decision, due on Tuesday, where it is widely expected to cut interest rates by 25 basis points to 3.60%. The New Zealand dollar was down 0.3%. 

The pound sterling rose 0.1% against the dollar. The Chartered Institute of Personnel and Development said Monday that only 57% of private sector employers planned to recruit staff over the next three months in the UK, the lowest since the start of 2021 though only slightly down from 58% in the last quarterly survey.

Meanwhile, Bank of England Chief Economist Huw Pill said on Friday that inflation pressures were likely to weaken further but there was a risk that future interest rate cuts could be delayed if higher inflation partly reflected longer-term behavioural shifts.

The euro rose 0.1% against the dollar. European Union foreign policy chief Kaja Kallas said on Sunday that any deal between Washington and Moscow to end the war in Ukraine must include Ukraine and the European Union, adding that she will convene a meeting of European foreign ministers on Monday to discuss next steps. US President Donald Trump plans to meet Russian President Vladimir Putin in Alaska on Friday.

The dollar index remained broadly weak after recent weak economic data fuelled expectations of rate cut by the US Federal Reserve in September. Fed funds futures traders are now pricing in an 88% probability of a 25-basis-point cut at the Fed's September meeting, according to the CME Group's FedWatch Tool. At 1515 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.26, against 98.27 Friday and 98.05 Thursday. 

Market participants now await the key US inflation data, due Tuesday, for further cues on the US rate trajectory. The US CPI for July is expected to have risen 2.8% on an annual basis, according to a Reuters poll, against 2.7% rise in June.  (Pratiksha) 

India Rupee: Off highs as banks buy dollars for importers, FPI outflows

NEW DELHI – The rupee came off its earlier highs against the dollar as banks bought the greenback on behalf of oil marketing companies and other importers, dealers said. The rupee rose to 87.4825 a dollar earlier in the day. "There is demand (for dollars) around these levels, mostly importers booking," a dealer at a private-sector bank said. "Some outflows are also there. Overall, the depreciation bias is there."

Importers stepped in to buy dollars to take advantage of the relatively lower dollar/rupee levels, dealers said. Further, some banks bought the greenback on behalf of foreign portfolio investors, looking to pull out funds from Indian markets, which weighed on the Indian unit, according to dealers. So far in August, FPIs have withdrawn $862.11 million from domestic markets, on a net basis.

Meanwhile, some banks sold the greenback on behalf of overseas investors who are likely looking to invest in the initial public offering of BlueStone Jewellery and Lifestyle Ltd., which supported the Indian unit, dealers said. The company's public offer opened Monday and will close Wednesday.

Market participants are now waiting for the key US inflation data, due Tuesday, for further cues on the US rate trajectory. Data showing higher-than-expected inflation could undermine the growing expectation for impending interest rate cuts in the world's largest economy. The US CPI for July is expected to have risen 2.8% on an annual basis, according to a Reuters poll, against 2.7% rise in June.

During the day, the rupee is seen moving in a range of 87.40 to 87.70 against the dollar. Dealers peg key technical resistance for the rupee at 87.40 a dollar and support at 87.70. (Pratiksha)

India Rupee: Premium at 11-wk high as RBI drains out INR 447.90 bln via VRRR

NEW DELHI – Dollar/rupee forward premiums rose across tenures on Monday, with the one-year forward premium hitting an over 11-week high, as the Reserve Bank of India drained INR 447.90 billion of liquidity from the banking system through its three-day variable rate reverse repo auction, dealers said. "The paying is mostly due to the VRRR auction," a dealer at a private-sector bank said. "Let's see if the 2.10% level (for the one-year forward premium) breaks finally."

The RBI on Monday held a three-day variable rate reverse repo auction for a notified amount of INR 500 billion. Banks offered to park INR 447.90 billion with the central bank, which took all of it.

Further, some banks entered into dollar-rupee sell/buy swaps in near-term segments of the forwards market ahead of the initial public offerings of some domestic companies, which boosted the near-term forward premiums. Near-term sell/buy swaps, which entail selling dollars for immediate delivery and buying them back at a future date, are a means of deploying dollars for short durations. BlueStone Jewellery and Lifestyle Ltd.'s public offer opened Monday and will close Wednesday. Shreeji Shipping Global Ltd.'s IPO will open on Aug. 19 and close on Aug. 21.

Market participants now await key US inflation data, due Tuesday, for further cues on the Federal Reserve's rate trajectory. Forwards of a currency pair are reflective of the interest rate differential between two countries.

Market participants see strong support for the one-year dollar/rupee forward premium at 2.10%. At 1315 IST, the one-year exact period dollar/rupee premium was 2.09%, against 2.08% Friday. On an absolute basis, the premium was 183.05 paise, against 182.27 paise Friday. (Pratiksha)

India Rupee: Technical levels for rupee - Aug 11

NEW DELHI – At 1110 IST, the rupee was at 87.5825 per dollar. At 0900 IST, the rupee was at 87.5050 a dollar, against the previous close of 87.6600. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Pratiksha)

India Rupee: Up on unwinding of long dlr bets in NDF, fall in dollar index

NEW DELHI – The rupee rose against the dollar Monday as some 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.

"The sharp move (in rupee) is most likely due to NDF positioning," a dealer at a state-owned bank said. "On Friday also we saw the same, same momentum is continuing I think." The central bank has been actively intervening in both the offshore NDF and spot market in the recent sessions to prevent the rupee from depreciating sharply in the face of US President Donald Trump's tariff blow to India.

Further, the dollar index declined on expectations of a rate cut by the US Federal Reserve in September after the recent weak economic data, which also supported the Indian unit, dealers said. On Saturday, Federal Reserve's Vice Chair of Supervision Michelle Bowman said recent weak jobs data supports her concerns about labor market fragility and strengthens her confidence in her own forecast that three interest-rate cuts will likely be appropriate this year.

Fed funds futures traders are now pricing in an 89% probability of a 25-basis-point cut at the Fed's September meeting, according to the CME Group's FedWatch Tool. At 0930 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.05, against 98.27 Friday and 98.05 Thursday.

Market participants are waiting for key US inflation data, due Tuesday, for further cues on the US rate trajectory. Data showing higher-than-expected inflation could undermine the growing expectation for impending interest rate cuts. The US CPI for July is expected to have risen 2.8% on an annual basis, according to a Reuters poll, against 2.7% rise in June.

"The rupee (dollar/rupee) may attempt a near-term pullback toward 87.50, with support at 87.20 and resistance at 87.70, though depreciation risks persist amid the trade uncertainties," Amit Pabari, managing director at CR Forex, said in a note.

During the day, the rupee is seen moving in a range of 87.40 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 up as dollar index stays weak; Chinese yuan flat

NEW DELHI – Most Asian currencies rose against the dollar Monday as the dollar index remained broadly weak after recent weak economic data fuelled expectations of rate cut by the US Federal Reserve in September. 

On Saturday, Federal Reserve's Vice Chair of Supervision Michelle Bowman said recent weak jobs data supports her concerns about labor market fragility and strengthens her confidence in her own forecast that three interest-rate cuts will likely be appropriate this year. Bowman was one of the two Fed governors who dissented last month against the US Federal Open Market Committee's decision to leave interest rates in the 4.25-4.50% range, where they have been since December.

Fed funds futures traders are now pricing in an 89% probability of a 25-basis-point cut at the Fed's September meeting, according to the CME Group's FedWatch Tool. At 0850 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.09, against 98.27 Friday and 98.05 Thursday. 

Market participants now await the key US inflation data, due Tuesday, for further cues on the US rate trajectory. Data showing higher-than-expected inflation could undermine the growing expectation for impending interest rate cuts. The US CPI for July is expected to have risen 2.8% on an annual basis, according to a Reuters poll, against 2.7% rise in June. 

The Indonesian rupiah rose 0.3% against the dollar, the most amongst its Asian peers, while the Phillipine peso gained 0.2%. The Philippine central bank's Governor Eli Remolona said on Monday that he is confident of achieving a 2% inflation rate this year, which is the lower end of its 2-4% target range. The South Korean won and the Malaysian ringgit were also up 0.2% against the US unit. 

Bucking the trend, the Taiwan dollar fell 0.1% against the greenback. This was despite data released Friday which showed that Taiwan's exports in July grew at their fastest in 15 years. Exports rose 42% from a year earlier to $56.68 billion, beating a Reuters poll forecast for an increase of 28.7%, to make July the third consecutive month of record exports. 

Further, the Chinese yuan was largely steady against the dollar even after the country's producer prices fell more than expected in July, while consumer prices were unchanged. The producer price index fell 3.6% year-on-year last month, data showed on Saturday, missing expectations of a 3.3% decline. China's CPI was flat year-on-year in July, compared with a 0.1% rise in June and beating a Reuters poll forecast of a 0.1% slide. Market participants are now watchful of any developments around trade talks between the US and China as Washington's tariff deadline on Beijing is due to expire Tuesday. (Pratiksha)

India Rupee: Expected range for rupee - Aug 11

NEW DELHI – Following are the expected support and resistance levels for the rupee on Monday, 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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