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Informist, Thursday, Aug. 14, 2025

 

By Pratiksha

 

NEW DELHI – The rupee ended lower against the dollar but erased a considerable portion of its losses Thursday as ratings agency S&P Global upgraded India's sovereign rating to 'BBB' from 'BBB-', dealers said. "The S&P news was good for the rupee. In the long term, it will help the inflows stream, although the initial market reaction was not extreme," a dealer at a private-sector bank said. 

 

After falling to a low of 87.6750 a dollar during the day, the rupee ended at 87.5500 a dollar, against 87.4400 a dollar on Wednesday. The local unit moved in the range of 29 paise during the day. Other Asian currencies fell 0.1-0.5% against the dollar, with the South Korean won being the worst hit. 

 

The Indian currency started the day broadly steady against the dollar but rose to the day's high of 87.3850 shortly afterwards, tracking weakness in the dollar index, which hovered near its over two-week low on growing expectations of a rate cut by the US Federal Reserve in September. US Treasury Secretary Scott Bessent on Wednesday called for a "series of rate cuts," and said the Federal Reserve could begin the policy rate easing with a 50 basis points cut.

 

Fed funds futures traders are now pricing in a 93.8% probability of a 25 bps cut and 6.2% chances of a 50 bps rate cut at the Fed's September meeting, according to the CME Group's FedWatch Tool. At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.84, against 97.79 Wednesday and 98.05 Tuesday.

 

However, banks rushed to buy dollars on behalf of oil marketing companies and other importers, looking to make the most of the relatively lower dollar/rupee levels. 

 

Further, banks also bought dollars on behalf of foreign portfolio investors, looking to pull out funds from domestic equities, dealers said. Following this, the Indian currency fell to the day's low of 87.6750. So far in August, FPIs have pulled out $1.43 billion from domestic equities amid uncertainty over US tariffs. "FPI sell-off is continuing as there is still so much risk off due to the whole tariff issue," a dealer at a private-sector bank said. "This pressure (on rupee) will not ease soon." 

 

However, the local unit erased almost 10 paise of losses from the day's low after S&P Global Ratings upgraded India's long-term sovereign credit rating, becoming the first major ratings agency to do so. S&P cited the Indian economy's resilience and sustained fiscal consolidation for the rating upgrade.

 

"Due to a long weekend and some event risk, the market did not react much. But we can see moderate rupee appreciation on this news over time," a dealer at a big state-owned bank said. Most dealers expect S&P's India rating upgrade to provide long-term support to the Indian unit as it will help the country attract foreign portfolio inflows. 

 

Meanwhile, around the same time as the S&P rating upgrade, data showed India's merchandise trade deficit widened to an eight-month high of $27.35 billion in July as imports rose at a quicker pace than exports, which exerted downward pressure on the Indian unit, according to dealers. India's trade deficit was $18.78 billion in June and $24.76 billion a year ago.

 

For the majority of the day, volume in the currency market was lacklustre as some traders refrained from placing fresh bets due to the truncated week due to the holiday on Friday. The market is closed on Friday for India's Independence Day. Market participants also remained cautious ahead of US President Donald Trump's meeting with Russian President Vladimir Putin on Friday in Alaska to discuss halting the war in Ukraine. The meeting assumes significance as India currently faces an additional 25% US tariff on Indian goods, on top of the 25% tariff announced earlier, due to New Delhi's continued purchases of Russian oil. 

 

An Indian government official said on Thursday that tariff levy on Indian goods will depend on the outcome of the meeting between Trump and Putin.

 

	AT 1530 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	87.5500	87.4700	87.3850	87.6750	87.4400
1-year dlr/rupee fwd (paise)	184.23	184.53	187.38	184.23	183.16

 

FORWARDS

The one-year dollar/rupee forward premium ended at a near three-month high, tracking a fall in the benchmark 10-year US Treasury yield on growing expectations of a rate cut by the US Federal Reserve in September, dealers said. Forwards of a currency pair are reflective of the interest rate differential between two countries.

 

The 10-year US bond yield fell to 4.24% Wednesday from 4.29% Tuesday. With the Fed likely to cut in September and slim chances of a rate cut by the Reserve Bank of India for the rest of the year after its Monetary Policy Committee stood pat on rates last week, the interest rate differential between the US and India may widen further, supporting forward premiums, dealers said.

 

However, some banks stepped in to sell dollars for forward delivery, to take advantage of the relatively higher forward levels, which capped the gains, dealers said. Premium rose to a high of 2.14% during the day.

 

Market participants now await the US producer price index and jobless claims data, due later in the day, for more cues on the Fed's rate trajectory. At 1530 IST, the one-year exact period dollar/rupee premium was 2.10%, against 2.09% Wednesday. On an absolute basis, the premium was 184.23 paise, against 183.16 paise Wednesday.

 

OUTLOOK

On Monday, the rupee will take cues from the outcome of Trump and Putin's meeting on Friday, dealers said. The meeting's outcome could shape expectations on whether trade relations between India and the US will improve or deteriorate going forward.

 

"Markets remain watchful ahead of Friday's key meeting between US President Trump and Russian President Putin over possible peace talks on the Russia-Ukraine war. The rupee is expected to trade in the 87.25–88.00 range," Jateen Trivedi, VP research analyst - commodity and currency at LKP Securities, said in a note. 

 

The rupee will also take cues from movement in the dollar index after the release of the US producer price index and jobless claims data. Market participants await the economic data for more cues on the Fed's rate trajectory

 

Dealers expect the Indian unit to be weighed down by foreign portfolio outflows as investors remain risk-averse, dealers said. However, they expect the central bank to intervene in the domestic spot market and offshore non-deliverable forwards market through dollar sales, if the rupee moves towards the psychologically crucial 88-per-dollar mark.

 

During the day, the rupee is expected to move in a range of 87.30 to 87.80 a dollar. Dealers peg technical support for the rupee at 87.80 a dollar and resistance at 87.30.

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India Rupee - World FX: Sterling rises on upbeat UK GDP data; euro falls

 

	AT 1510 IST	HIGH	LOW	PREVIOUS
GBP/USD	1.3586	1.3592	1.3563	1.3566
EUR/USD	1.1685	1.1716	1.1668	1.1705
NZD/USD	0.5954	0.5991	0.5948	0.5974
AUD/USD	0.6532	0.6569	0.6525	0.6542
USD/JPY	146.4980	147.3640	146.2160	147.2630
USD/CAD	1.3774	1.3783	1.3745	1.3760
EUR/JPY	171.1930	172.4415	170.9690	172.4100
CHF/USD	1.2407	1.2431	1.2393	1.2408
EUR/CHF	0.9418	0.9432	0.9413	0.9412

 

MUMBAI – The pound sterling rose to a five-week high against the dollar Thursday after data showed that UK GDP rose by 0.3% in the quarter ended June, following a 0.7% growth in Jan-Mar but above the market forecast of 0.1% in the reported period. The sterling was up 0.2% against the dollar. 

 

UK manufacturing production bounced up to a 0.5?vance following a 1% contraction in May, and industrial production grew 0.7?ter falling 1.3% in the previous month, also exceeding the market consensus of a 0.2% increase.

 

The euro was down 0.2% against the dollar and down 0.3% against the sterling pound after data from the UK cemented bets of the Bank of England keeping rates steady, backing the English currency. The Eurozone GDP grew 0.1% in Apr-Jun, the second estimate released by Eurostat showed on Thursday. The bloc's GDP increased at an annual rate of 1.4% in Apr-Jun, the same as that seen in the initial estimate, while aligning with the market consensus.

 

The Japanese yen surged 0.6% against the dollar on the back of the Bank of Japan's hawkish stance in July, signalling that it will raise interest rates further if growth and inflation continue to advance in line with estimates. This, coupled with expectations of a rate cut by the Federal Reserve, weighed on the dollar and supported the yen. 

 

The dollar index was steady, backed by a fall in the euro ahead of the release of US producer price index data and weekly jobless claims data. US Treasury Secretary Scott Bessent said in an interview on Wednesday that short-term Fed interest rates should be 1.5-1.75% lower than the current benchmark rate at an effective 4.33%. Bessent added that there is a good chance that the central bank could opt for a 50-basis-point rate cut in September.

 

However, San Francisco Fed President Mary Daly in a Wall Street Journal interview Thursday, said, "a jumbo rate cut next month doesn't seem warranted. Policy is likely to be too restrictive for where the economy is headed. So for me, that calls for recalibration." At 1510 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.82, against 97.79 Wednesday and 98.05 Tuesday.  (Kabir Sharma)

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India Rupee: Falls on dollar buys for FPI outflows, importers; volume dull

 

	AT 1345 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	87.6025	87.4700	87.3850	87.6150	87.4400

 

NEW DELHI – The rupee fell sharply against the dollar Thursday as banks bought the greenback on behalf of foreign portfolio investors and importers, dealers said. However, broad-based weakness in the dollar index limited losses for the Indian unit, they said.  

 

Banks bought dollars on behalf of FPIs, looking to pull out funds from domestic equities, which weighed on the local unit, dealers said. So far in August, FPIs have pulled out $1.43 billion from domestic equities amid US tarif uncertainty. "Equity outflows seem to be there since risk events are still not out of picture," a dealer at a big state-owned bank said. 

 

Market participants are in wait-and-watch mode ahead of US President Donald Trump and Russian President Vladimir Putin's meeting on Friday in Alaska to discuss halting the war in Ukraine. The meeting holds significance as India currently faces an additional 25% US tariff on Indian goods, on top of a 25% tariff announced previously, due to its continued purchases of Russian oil. 

 

Further, some banks bought the greenback on behalf of oil marketing companies and other importers, noting the relatively lower dollar/rupee levels earlier in the day, dealers said. The rupee rose to a high of 87.3850 a dollar earlier in the day. 

 

Meanwhile, volume in the currency market was lower than usual as some traders refrained from placing fresh bets due to a holiday-truncated week. The market is closed Friday on account of Independence Day. "Volumes are not too much today. Risk off mood is there and one may not want to take chances before a long holiday," a dealer at a private-sector bank said. 

 

During the day, the rupee is seen moving in a range of 87.30 to 87.70 against the dollar. Dealers peg key technical support for the rupee at 87.70 a dollar.  (Pratiksha)

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India Rupee: Premium at 3-mo high as US yields fall on Fed rate cut optimism

 

	AT 1210 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	87.5000	87.4700	87.3850	87.5100	87.4400
1-year dlr/rupee fwd (paise)	185.73	184.53	186.34	184.23	183.16

 

NEW DELHI – The one-year dollar/rupee forward premium rose to a near three-month high, tracking a fall in the benchmark 10-year US Treasury yield on growing expectations of a rate cut by the US Federal Reserve in September, dealers said. Forwards of a currency pair are reflective of the interest rate differential between two countries.

 

"The 2.10% level (for the one-year forward premium) has breached finally," a dealer at a foreign bank said. "If chances of 50 basis point cut increase, we may see 2.20% kind of levels happening." The 10-year US bond yield fell to 4.24% Wednesday from 4.29% Tuesday.

 

US Treasury Secretary Scott Bessent on Wednesday called for a "series of rate cuts," and said the Fed could begin the policy easing cycle with a 50-basis-point cut. Fed funds futures traders are now pricing in a 95.8% probability of a 25-bps cut and 4.2% chance of a jumbo 50-bps rate cut at the Fed's September meeting, according to the CME Group's FedWatch Tool.

 

With the Fed likely to go for a rate cut in September and slim chances of a rate cut by the Reserve Bank of India for the rest of the year after its Monetary Policy Committee stood pat on rates at 5.50% last week, the interest rate differential between the US and India may widen further, supporting forward premiums, dealers said.

 

Market participants now await the US producer price index and jobless claims data, due later in the day, for more cues on the Fed's rate trajectory. At 1210 IST, the one-year exact period dollar/rupee premium was 2.12%, against 2.09% Wednesday. On an absolute basis, the premium was 185.73 paise, against 183.16 paise Wednesday. Premium rose to a high of 2.13% during the day. (Pratiksha)

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India Rupee: Technical levels for rupee - Aug 14

 

NEW DELHI – At 1100 IST, the rupee was at 87.4600 per dollar. At 0900 IST, the rupee was at 87.4700 a dollar, against the previous close of 87.4400. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

 

Participants	S2	S1	R1	R2
State-owned bank	87.80	87.70	87.30	87.10
Private-sector bank	87.90	87.70	87.30	87.20
Brokerage firm	87.70	87.60	87.40	87.30

 

(Pratiksha)

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India Rupee: Steady as importers' dollar buys nullify dollar index weakness

 

	AT 0940 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	87.4525	87.4700	87.3875	87.4925	87.4400

 

NEW DELHI – The rupee was largely steady against the dollar as the impact of weakness in the dollar index was neutralised by dollar purchases on behalf of importers, dealers said. The dollar index was around an over two-week low owing to increased expectations of a rate cut by the US Federal Reserve next month after the US July inflation data.

 

"People are now talking about a 50 bps rate cut in the US as well. So that has kind of improved risk appetite," a dealer at a private-sector bank said. "If the 87.30 mark breaks, we may see appreciation of 20-30 paise I think."

 

US Treasury Secretary Scott Bessent on Wednesday called for a "series of rate cuts," and said the Federal Reserve could begin the policy rate easing with a 50 basis points cut. Fed funds futures traders are now pricing in a 93.8% probability of a 25 bps cut and 6.2% chances of a 50 bps rate cut at the Fed's meeting in September, according to the CME Group's FedWatch Tool. At 0940 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.73, against 97.79 Wednesday and 98.05 Tuesday.

 

Some banks bought the greenback on behalf of importers, looking to make the most of the relatively lower dollar/rupee levels, which weighed on the Indian unit, dealers said. However, the dollar purchases by importers were not aggressive in nature as they expect the Indian unit to appreciate further, they said.

 

Dealers expect volume in the currency market to be lacklustre as the market is closed Friday on account of Independence Day. Market participants may also exercise caution ahead of a meeting between US President Donald Trump and Russian President Vladimir Putin on Friday in Alaska. The meeting holds importance as the US last week 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. The meeting's outcome could give insights on whether trade relations between India and the US will get better or turn worse going ahead.

 

During the day, the rupee is seen moving in a range of 87.30 to 87.70 against the dollar. Dealers peg key technical resistance for the rupee at 87.30 a dollar.  (Pratiksha)

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India Rupee - Asia FX: Most up as dlr index stays weak on Fed rate cut hopes

 

NEW DELHI – Most Asian currencies rose against the dollar Thursday as the dollar index continued to hover around an over two-week low due to growing expectations of a rate cut by the Federal Reserve next month after the recent inflation data. Moreover, US Treasury Secretary Scott Bessent on Wednesday called for a "series of rate cuts," and said the Fed could begin the policy easing cycle with a 50-basis-point cut. 

 

Fed funds futures traders are now pricing in a 93.8% probability of a 25-bps cut and 6.2% chances of a 50-bps rate cut at the Fed's September meeting, according to the CME Group's FedWatch Tool. At 0855 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.75, against 97.79 Wednesday and 98.05 Tuesday.

 

The Indonesian rupiah was up 0.5% against the dollar, the most amongst its peers, while the Malyasian ringgit was up 0.2%. The Thai baht rose 0.1% against the dollar even after Thailand's central bank lowered its policy rate to a near three-year low on Wednesday to boost a slowing economy dealing with US tariffs. The monetary committee unanimously cut the one-day repurchase rate by 25 bps to 1.50%, the lowest since late 2022. "The Thai baht showed limited reaction to the widely expected rate cut. Looking ahead, the outlook for the baht remains mixed," MUFG Bank Senior Currency Analyst Lloyd Chan said in a note. "While potential Fed rate cuts in September could support appreciation, further BoT (Bank of Thailand) easing is likely to offset these gains, keeping the currency stable in the near term."

 

The Chinese yuan was also up 0.1% against the greenback. Bucking the trend, the South Korean won was down 0.4% against the dollar after the finance ministry said Thursday that the country's economy continues to face "concerns" due to a delayed recovery in construction investment and slowing exports, but there are some positive signs, including improved consumer sentiment. The Philippine peso was flat against the dollar. (Pratiksha) 

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India Rupee: Expected range for rupee - Aug 14

 

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

 

PARTICIPANT	SUPPORT	RESISTANCE
State-owned bank	87.60	87.30
Private-sector bank	87.60	87.25
Private-sector bank	87.70	87.30
Foreign bank	87.70	87.20
Brokerage firm	87.75	87.30
Brokerage firm	87.70	87.20

 

 

 

 

 

 

 

 

 

(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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