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Informist, Friday, Aug. 22, 2025

By Pratiksha

MUMBAI – The rupee ended sharply lower against the dollar, posting its biggest single day fall in over three weeks, as the dollar index gained ahead of Federal Reserve Chair Jerome Powell's speech at the much-awaited Jackson Hole symposium, later in the day, dealers said. Banks' dollar buys for oil marketing companies and likely foreign fund outflows also weighed on the Indian unit, they said. 

"The other Fed members were pretty hawkish the other day, so now there is a lot of uncertainty about what Powell is going to say," a dealer at a state-owned bank said. "No one can say 100% that there will be rate cut in US next month." 

The rupee settled at 87.5300 a dollar on Friday, depreciating 0.3% from its previous close and falling for the third consecutive trading day. While Asian currencies moved on a mixed note, the rupee emerged as the second worst performer among the pack, with the Indonesian rupiah being the worst hit. 

The rupee started the day on a weak note, falling 10 paise at the opening, tracking a rise in the dollar index. The index rose after several Fed officials' comments on Thursday dampened hopes of a rate cut by the Fed next month. 

Cleveland Fed President Beth Hammack said on the sidelines of the Jackson Hole symposium that with the data and information available right now, if the meeting was to happen tomorrow, he would not see a case for reducing interest rates. Further, Kansas City Fed President Jeffrey Schmid said, "I think we're in a really good spot and I think we really have to have very definitive data to be moving that policy right now." The index also rose after data released Thursday showed US business activity picked up pace last month, mainly due to a resurgent manufacturing sector.

Fed funds futures traders are now pricing in a 71.3% probability of a 25-bps cut at the Fed's September meeting, against 85% earlier this week, according to the CME Group's FedWatch Tool. At 1530 IST, the dollar index, which measures the strength in the dollar against a basket of six major currencies, was at 98.70, against 98.62 Thursday and 98.22 Wednesday. 

Noting Fed official's comments, some traders also placed long dollar positions, which weighed on the Indian unit, dealers said. "I think Powell should not be that hawkish. People have mostly priced in a 25-bps cut now, but we'll have to see if that changes after the speech," a dealer at a big state-owned bank said. 

Shortly after opening, the Indian currency fell to 87.49 a dollar, as banks stepped in to buy dollars on behalf of oil marketing companies, who feared a further fall in the local unit going ahead, dealers said. The rupee has seen a sharp downward move after rising above the 87-per-dollar mark just Thursday. 

Moreover, uncertianty related to US tariffs on India, ahead of the looming Aug. 27 deadline of the additional 25% tariff on India, also weighed on the Indian unit, dealers said. US President Donald Trump has slapped an additional 25% punitive tariff on Indian goods, on top of a 25% tariff announced previously, citing New Delhi's continued purchases of Russian oil. "There has been no clarity on the tariff front so far. The deadline is not too far," a dealer at a foreign bank said. "So that uncertianty is playing out. The last few days we saw some selling (of dollars), which is why it was not reflecting much in the levels."

During the second half of the trade, the rupee fell past the key support of 87.50 a dollar, as some foreign banks bought the greenback for foreign fund outflows from local equities, dealers said. Both the Nifty 50 and Sensex ended 0.9% lower each. Some dealers said that stop losses on short dollar bets were triggered around the key level, which exacerbated the fall in the local unit and it touched the day's low of 87.5450.

Meanwhile, some dealers speculated few foreign banks sold dollars, which limited losses for the local unit. However, the reason behind the selling of the greenback was not known certainly.

FORWARDS

The one-year dollar/rupee forward premium ended slightly lower on Friday as recent comments by Federal Reserve officials dampened market participants' hopes of a rate cut by the US central bank next month, dealers said. Forwards of a currency pair are reflective of the interest rate differential between two countries.

US treasury yields rose on Thursday after the Fed officials' comments and the economic data, weighing on the forward premiums, dealers said. The 10-year US bond yield rose to 4.33% Thursday against 4.29% Wednesday. Should the Fed opt for a pause in rates in September, at a time when there are only slim chances of the Reserve Bank of India's Monetary Policy Committee going for further rate cuts for the rest of the year, the interest rate differential between India and the US will not widen as much as expected earlier. 

Market participants will now closely assess Powell's speech at the Jackson Hole symposium, due later in the day, to get more cues on the US rate trajectory. Powell will speak on the economic outlook and the central bank's policy framework. 

At 1530 IST, the one-year exact period dollar/rupee premium was 2.14%, against its previous close of 2.16%. On an absolute basis, the premium was 187.18 paise, against 188.11 paise Thursday. Dealers see the one-year forward premium in the range of 2.05-2.20% in the near term. 

OUTLOOK

On Monday, the rupee will take cues from movement in the dollar index after Powell's speech at the Jackson Hole symposium at 1930 IST, dealers said. Market participants keenly await Powell's comments for more cues on the Fed's rate cut trajectory.

After recent comments by several Fed official's, most dealers expect Powell to push back against rate cut expectations. If that is the case, they expect the rupee to fall to 87.80 a dollar. However, if Powell strikes a dovish tone in his speech, the rupee may be back above 87.00 a dollar, they said.   

Moreover, market participants will also be watchful of Trump's remarks in his public address from the White House later in the day. They will watch out for further developments on the US tariff front. 

"The rupee is expected to trade between 87.30-87.80 on Monday after seeing the impact of Jackson Hole and any new development on the tariff front as Trump is scheduled to make some announcement today evening," Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, said in a note. 

Most dealers expect banks to continue buying dollars on behalf of importers around the current levels on the expectation that the local unit may depreciate further going ahead amid uncertianty on the US tariff front. "The tariff deadline is near, so may be people are frontloading on their imports," a dealer at a state-owned bank said. "This sentiment will continue until there is no clarity on the tariff side."

During the day, the rupee is seen moving in a range of 87.30-87.70 against the dollar. Dealers peg key technical support for the Indian unit at 87.80 a dollar.

India Rupee - World FX: Yen falls post inflation data; Powell's speech eyed

MUMBAI – The Japanese yen fell nearly 0.2% against the US dollar Friday after data showed Japan's core inflation slowed for a second straight month in July. The core consumer price index, which excludes fresh food items, rose 3.1% in July from a year earlier against market expectations of a 3.0% rise but lower than 3.3% in June. Market participants, however, continue to expect a rate hike by Bank of Japan as inflation stayed above the central bank's 2% target.

The dollar index rose marginally Friday after upbeat economic data and comments from Federal Reserve officials pared expectations of a rate cut by the Fed next month. Data released Thursday showed US Manufacturing Purchasing Managers' Index rose to 53.3 in August from 49.8 in July, surpassing the market consensus of 49.5.

Meanwhile, Cleveland Fed President Beth Hammack said on the sidelines of the Jackson Hole symposium that with the data and information available right now, if the Federal Open Market Committee meeting was to happen tomorrow, she would not see a case for reducing interest rates. Further, Kansas City Fed President Jeffrey Schmid said, "I think we're in a really good spot and I think we really have to have very definitive data to be moving that policy right now."

At 1515 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.71, against 98.62 Thursday and 98.21 Wednesday. Fed funds futures traders are now pricing in a 75.5% probability of a 25-basis point cut in interest rate at the Fed's September meeting, against 85% earlier this week, according to the CME Group's FedWatch Tool. Investors are waiting for Fed Chair Jerome Powell's speech at the Jackson Hole Economic Policy Symposium later in the day. Powell will speak on the economic outlook and the central bank's policy framework, and investors will look for cues on the Fed's interest rate trajectory.

The New Zealand dollar slipped 0.2% and Australian dollar was steady against the greenback. The pound sterling was also steady against the greenback. The UK consumer confidence index rose to 5 in August after the Bank of England announced a rate cut earlier in the month, according to a survey by Gfk.

Data released Friday showed Germany's economy shrank by 0.3% in the Apr-Jun quarter, as demand from its top trading partner the US slowed in anticipation of tariffs. In the Apr-Jun quarter, Germany's total exports of goods and services were down 0.1% from the previous quarter. Influenced by this, the euro traded 0.1% lower against the dollar.  (Rati Chaphekar)

India Rupee: Premium down as Fed officials' comments dim hopes of US rate cut

MUMBAI – The one-year dollar/rupee forward premium fell on Friday as recent comments by Federal Reserve officials dampened market participants' hopes of a rate cut by the US central bank next month, dealers said. Forwards of a currency pair are reflective of the interest rate differential between two countries.

Cleveland Fed President Beth Hammack said on the sidelines of the Jackson Hole symposium that with the data and information available right now, if the meeting was to happen tomorrow, he would not see a case for reducing interest rates. Further, Kansas City Fed President Jeffrey Schmid said, "I think we're in a really good spot and I think we really have to have very definitive data to be moving that policy right now."

Moreover, data released Thursday showed US business activity picked up pace in July, mainly due to a resurgent manufacturing sector, boosting the dollar index. S&P Global's flash US Composite PMI output index, which tracks the manufacturing and services sectors, increased to 55.4 this month, the highest level since December, from 55.1 in July. A reading above 50 indicates expansion in the private sector.

US treasury yields rose on Thursday after the Fed officials' comments and the economic data, weighing on the forward premiums, dealers said. The 10-year US bond yield rose to 4.33% Thursday against 4.29% Wednesday. Should the Fed opt for a pause in rates in September, at a time when there are only slim chances of the Reserve Bank of India's Monetary Policy Committee going for further rate cuts for the rest of the year, the interest rate differential between India and the US will not widen as much as expected earlier. 

Softer economic data in the US earlier in the month had led to a near certain expectations of a rate cut by the Fed next month. However, Fed funds futures traders are now pricing in a 73.3% probability of a 25-bps cut at the Fed's September meeting, against 85% earlier this week, according to the CME Group's FedWatch Tool.   

Market participants will now closely assess Powell's speech at the Jackson Hole symposium, due later in the day, to get more cues on the US rate trajectory. Powell will speak on the economic outlook and the central bank's policy framework. "I am not very confident that Powell's comments will be dovish after what the Fed officials said," a dealer at a state-owned bank said. "But if he is dovish, I expect the one-year forward premium to rise to 2.25%."

At 1255 IST, the one-year exact period dollar/rupee premium was 2.13%, against its previous close of 2.16%. On an absolute basis, the premium was 186.47 paise, against 188.11 paise Thursday. Dealers see the one-year forward premium in the range of 2.05-2.20% in the near term. (Pratiksha)

India Rupee: Falls sharply on dollar buys by oil cos, rise in dollar index

MUMBAI – The rupee fell sharply against the dollar as banks bought the greenback on behalf of oil marketing companies and the dollar index rose further, dealers said. The Indian currency fell to a low of 87.4900 a dollar. 

Banks bought the greenback on behalf of oil importers, fearing a further depreciation in the rupee, which weighed on the Indian unit, they said. "There was buying (of dollars) from oil importers yesterday (Thursday) in the end, seems like it sort of continued today as well," a dealer at a state-owned bank said. "This is why the quick move from 87.36 to 87.49 happened." The rupee fell 21 paise and ended at 87.2700 a dollar Thursday.

The dollar index also rose ahead of the much-awaited speech by Federal Reserve Chair Jerome Powell at the Jackson Hole Symposium later Friday, weighing on the local unit, dealers said. The dollar index gained as several Fed officials' comments Thursday pared expectations of a rate cut by the Fed next month.

Cleveland Fed President Beth Hammack said on the sidelines of the symposium that with the data and information available right now, if the meeting was to happen tomorrow, he would not see a case for reducing interest rates. Further, Kansas City Fed President Jeffrey Schmid said, "I think we're in a really good spot and I think we really have to have very definitive data to be moving that policy right now."

Moreover, data released Thursday showed US business activity picked up pace last month, driven by a resurgent manufacturing sector, boosting the dollar index. S&P Global's flash US Composite PMI output index, which tracks the manufacturing and services sectors, increased to 55.4 this month, the highest level since December, from 55.1 in July. A reading above 50 indicates expansion in the private sector.

"There is uncertainty on what Powell will say after comments by other Fed officials," a dealer at a private-sector bank said. "The PMI data was also on the higher side." Fed funds futures traders are now pricing in a 73.3% probability of a 25 bps cut at the Fed's September meeting, against 85% earlier this week, according to the CME Group's FedWatch Tool. 

A fall in other Asian currencies also weighed on the rupee, according to dealers. Most Asian units fell 0.1-0.4% against the dollar, with the Indonesian rupiah being the worst hit. At 1200 IST, the dollar index, which measures the strength in the dollar against a basket of six major currencies, was at 98.77 against 98.62 Thursday and against 98.22 Wednesday. The index rose to 98.83 during the day. 

During the day, the rupee is seen moving in a range of 87.20 and 87.60 against the greenback. Dealers peg strong technical support for the domestic currency at 87.50 a dollar. (Pratiksha)

India Rupee: Technical levels for rupee - Aug 22

MUMBAI – At 1050 IST, the rupee was at 87.4800 per dollar. At 0900 IST, the rupee was at 87.3675 a dollar, against the previous close of 87.2700. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Pratiksha)

India Rupee: Falls as dollar index up before Powell's speech at Jackson Hole

MUMBAI – The rupee fell against the dollar, in line with Asian currencies, Friday as the dollar index rose ahead of the much-awaited speech by Federal Reserve Chair Jerome Powell at the Jackson Hole Symposium later in the day, dealers said. Market participants keenly await Powell's comments for more cues on the Fed's rate cut trajectory.  

"I don't expect too much activity before Powell's speech. Rupee will find a direction on Monday now," a dealer at a private sector bank said. "Asian currencies are also weak, so that is also weighing."

The dollar index rose after several Fed officials' comments on Thursday reduced expectations of a rate cut by the Fed next month. Cleveland Fed President Beth Hammack said on the sidelines of the symposium that with the data and information available right now, if the meeting was to happen tomorrow, he would not see a case for reducing interest rates. Further, Kansas City Fed President Jeffrey Schmid said, "I think we're in a really good spot and I think we really have to have very definitive data to be moving that policy right now."

Fed funds futures traders are now pricing in a 75.5% probability of a 25 bps cut at the Fed's September meeting, against 85% earlier this week, according to the CME Group's FedWatch Tool. The index also rose after data released Thursday showed US business activity picked up pace last month, driven by a resurgent manufacturing sector.

At 0936 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.78, against 98.62 Thursday and 98.22 Wednesday. Other Asian currencies fell 0.1-0.3% against the dollar, with the Taiwan dollar being the worst hit. 

"All eyes now turn to Fed Chair Jerome Powell's speech at Jackson Hole, which will likely set the near-term course for the dollar—and by extension, the rupee. For now, immediate resistance is at 87.40," Amit Pabari, managing director at CR Forex, said in a note. 

A fall in domestic equities also weighed on the local unit, according to dealers. At 0936 IST, the Nifty 50 and Sensex were down 0.5% each. 

During the day, the rupee is seen moving in a range of 87.00 and 87.40 against the greenback. Dealers peg key technical support for the domestic currency at 87.40 a dollar. (Pratiksha)

India Rupee - Asia FX: Most down as dollar index up ahead of Powell's speech

MUMBAI – Most Asian currencies fell against the dollar as the dollar index rose ahead of Federal Reserve Chair Jerome Powell's speech at the much-awaited Jackson Hole Economic Policy Symposium later in the day. Powell will speak on the economic outlook and the central bank's policy framework, and investors will look for cues on the Fed's rate cut trajectory.

"Overall, markets will look closely at Chair Powell's Jackson Hole speech out later tonight. We expect some modest dovish tilt but certainly not a 180 degrees about-face turn in terms of tone, given the continued uncertainty around tariff impact on inflation," Michael Wan, senior currency analyst at MUFG Bank, said in a note.  

Meanwhile, Cleveland Fed President Beth Hammack said on the sidelines of the symposium that with the data and information available right now, if the meeting was to happen tomorrow, he would not see a case for reducing interest rates. Further, Kansas City Fed President Jeffrey Schmid said, "I think we're in a really good spot and I think we really have to have very definitive data to be moving that policy right now."

Comments by Fed officials on Thursday weighed on market participants' expectations of a rate cut in September. Fed funds futures traders are now pricing in a 75.5% probability of a 25-bps cut at the Fed's September meeting, against 85% earlier this week, according to the CME Group's FedWatch Tool.

The dollar index gained following Fed officials' comments, which weighed on the Asian currencies. At 0920 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.66, against 98.62 Thursday and 98.22 Wednesday.

The Taiwan dollar fell 0.3% against the dollar, the most among its peers, while the Malaysian ringgit fell 0.1% against the dollar. Data released Thursday showed Malaysia's labour productivity per hour worked grew 3.4% Apr-Jun. Total hours worked in the country also increased by 1% to 9.7 billion hours. The Indonesian rupiah fell 0.2% against the dollar. 

The Philippine peso traded flat against the greenback while the South Korean won was up 0.5% against the dollar.  (Rati Chaphekar)

India Rupee: Expected range for rupee - Aug 22

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 Akul Nishant Akhoury

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