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Informist, Tuesday, Aug. 26, 2025

By Gowri Lakshmi

MUMBAI – The rupee ended at a two-week low against the dollar Tuesday due to foreign fund outflows as investor sentiment turned jittery ahead of the additional 25% US tariffs, scheduled to come into effect Wednesday, dealers said. Importers also purchased the dollars, wary of a further fall of the rupee in the coming days, which put the rupee under further pressure. However, likely dollar sales by exporters helped pare losses from early trade, dealers said.

"Outflow is there from all markets, and the dollar also saw an uptick. Though importers bought (dollars), they were not in panic," a dealer at a private-sector bank said. "And since the rupee did not breach 80 (87.80 a dollar), exporters started selling, which supported the rupee along with some foreign (banks) selling for likely inflows." 

After hitting a three-week low of 87.8050 a dollar, the Indian unit pared some of the losses and ended at 87.6825, against 87.5800 a dollar Monday. The domestic currency moved in a relatively wider range of 18 paise during the day. 

Most other Asian currencies weakened against the dollar, falling 0.1-0.6%, due to the strengthening of the dollar index. The Philippines' peso was the worst hit amongst its peers, followed by the South Korean won.

The rupee started the day sharply lower against the dollar at 87.7275 as banks purchased dollars on behalf of importers and overseas investors, as their risk-averse sentiment was triggered after Washington issued a draft notice confirming the implementation of the additional 25% tariffs on Indian goods on Wednesday, which would now push the total tariffs on India to 50%.

"To address the national emergency stemming from the Government of the Russian Federation's actions taken against Ukraine, he (US President Donald Trump) is imposing an additional 25% tariff on imports from India, effective August 27, due to India's direct or indirect importation of Russian Federation oil," the White House statement said.

The Indian unit hit a three-week low, shortly after the market opened, due to persistent dollar purchases from overseas investors, who withdrew funds from the domestic debt market and equity market, dealers said. On Tuesday, the benchmark stock indices, the Nifty 50 and the BSE Sensex, ended 1% lower each. 

Further, a rise in the dollar index also weighed on the rupee, dealers said. The dollar index remained steady after rebounding on Monday, paring losses from last week. At 1530 IST, the dollar index, which measures the strength of the dollar against a basket, was at 98.23, broadly steady from Monday and up from 97.73 Friday.

However, the rupee was able to pare some of the losses from early trade as banks sold the greenback on behalf of exporters, who wanted to take advantage of the relatively higher dollar/rupee levels, and as the rupee did not breach the key support level of 87.85 a dollar, dealers said. "I think they (Reserve Bank of India) would have come and since the rupee did not go beyond 80, exporters sold at those levels," a dealer at a private-sector bank said. 

Some dealers also speculated that the RBI sold dollars at around 87.80 a dollar to prevent the rupee from falling further. Some dealers also said a few foreign banks sold the greenback for foreign-fund inflows, likely relating to the MSCI Global Standard Indexes re-organisation, which came into effect Tuesday. "RBI protecting it near 87.80, while some MSCI gross inflows brought the spot down to 87.6225 during the closing time," Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, said in a note. 

FORWARDS

The one-year dollar/rupee forward premium ended at an over 15-week high for the second consecutive day as banks purchased forward dollars on behalf of importers, dealers said. However, exporters' dollar sales for forward delivery capped the rise, dealers said. The one-year exact period dollar/rupee hit a high of 2.23%, its highest level since May 9. 

However, the rise in the dollar/rupee premium was capped as exporters sold forward dollars to take advantage of the relatively higher premium levels, dealers said. A slight rise in the US Treasury yields also limited the rise in the dollar/rupee premium, according to some dealers. 

The yield on the 10-year benchmark US Treasury note rose by 2 basis points to 4.28% on Monday, ahead of the release of the Personal Consumption Expenditure Price Index. Fed Funds Futures traders now see an 83.7% probability of the US Federal Open Market Committee lowering the benchmark lending rate by 25 basis points at its Sept. 17 meeting, as per the CME FedWatch tool. Forwards of a currency pair are reflective of the interest rate differential between the two countries. 

Tuesday, the one-year exact period dollar/rupee premium ended at 2.21%, against its previous close of 2.20%. On an absolute basis, the premium was 195.00 paise, against 192.81 paise Monday.

OUTLOOK

Indian financial markets are shut on Wednesday on account of Ganesh Chaturti. On Thursday, the rupee will take cues from the movement of the dollar index and crude oil prices, dealers said. They expect rupee to remain under pressure, likely due to continued foreign fund outflows and dollar purchases by importers. Market participants will also keep a close watch on any tariff-related or geopolitical news, dealers said. 

Should the rupee come under immense pressure, dealers expect the RBI to step in with dollar sales, to prevent the rupee from inching toward the psychologically crucial level of 88 per dollar. Dealers also expect exporters to sell dollars at around 87.70 a dollar and below levels, to take advantage of the relatively higher dollar/rupee levels, dealers said. This is likely to provide further support to the rupee, dealers said. 

Market participants are also awaiting the US Personal Consumption Expenditures Price Index for July, due Friday, for more cues into the Fed's rate outlook. On Thursday, the rupee will move in a range of 87.50 and 87.90 against the dollar. Dealers peg key technical support for the rupee at 87.85 a dollar. 

India Rupee - World FX: Dlr index rebounds; mkt awaits US inflation data Fri

MUMBAI – The dollar index remained steady after rebounding Monday as it pared losses from last week after US Federal Reserve Chair Jerome Powell hinted at a possible interest rate cut  by the US central bank next month. Market participants are now keenly awaiting the US Personal Consumption Expenditures Price Index for July, due Friday, for more cues into the Fed's rate outlook.

The core Personal Consumption Expenditures Price Index, the Fed's preferred gauge of inflation, is expected to inch up to 2.9% on year in July from 2.8% in the previous month, according to economists polled by Dow Jones. Fed funds futures traders now see an 83.7% probability of the Fed lowering the benchmark lending rates by 25 basis points at its Sept. 17 meeting, as per the CME FedWatch tool. At 1441 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.43, unchanged from Monday and up from 97.73 Friday.

Meanwhile, President Donald Trump fired Fed Governor Lisa Cook, sparking concerns about the central bank's independence and marking an escalation of Trump's frustration with the Fed. In a letter, Trump said he was firing Cook over alleged improprieties in obtaining mortgage loans. Cook responded that Trump had no authority to fire her from the central bank and said she would not resign.

The Australian dollar was down 0.1% against the US currency after the minutes of the Reserve Bank of Australia's August monetary policy indicated policymakers agreeing for further rate cuts in 2026. "The RBA board saw a strong case for a 25bps cut in the cash rate," the minutes said. "The board saw arguments for both a gradual pace of easing and for a faster pace." On Aug. 12, the Reserve Bank of Australia cut its benchmark lending rates by 25 bps to 3.6%, the lowest level since April 2023, and downgraded the annual economic outlook. 

The euro and the Canadian dollar traded flat against the dollar while the Japanese yen was down 0.2% against the greenback. The Swiss franc and the pound sterling fell 0.1% each against the US unit due to the gains of the dollar index.

The New Zealand dollar was down 0.1% after Trump threatened to push tariffs on Chinese goods to 200%. Any change in the Chinese economy directly impacts the New Zealand currency due to their close bilateral trade relations. 

Trump Monday said China has to supply the US with more magnets or "we (the US) have to charge them 200% tariff or something". Trump also threatened to impose additional tariffs and export restrictions on advanced technology and semiconductors in retaliation to digital services taxes that hit American technology companies. The offshore Chinese yuan traded flat against the dollar in early trade. Trump's remarks come days after Beijing and Washington agreed to prolong their trade truce for another 90 days.  (Gowri Lakshmi)

India Rupee: 1-year premium hits over 15-wk high as importers buy forward dollars

MUMBAI – The one-year dollar/rupee forward premium hit an over 15-week high for the second consecutive day as banks purchased forward dollars on behalf of importers, dealers said. However, exporters' dollar sales for forward delivery capped the rise, dealers said. The one-year exact period dollar/rupee hit a high of 2.23%, its highest level since May 9. 

"Importers are panic paying – it is the tariff effect, some receiving is there because these are good levels. However, the panic amongst importers are limited and not something beyond control as the market had already priced in these (tariff) effects," a dealer at a private-sector bank said. 

On Monday, the Department of Homeland Security, through US Customs and Border Protection, issued an official notice confirming the 25% additional tariff on Indian exports to the US, which will be effective from Wednesday. This will push the total tariffs on Indian products to 50%. The White House said the move is to exert pressure on Russian President Vladimir Putin to put an end to the ongoing Russia-Ukraine war by restricting Moscow's oil revenue. 

"To address the national emergency stemming from the Government of the Russian Federation's actions taken against Ukraine, he (Trump) is imposing an additional 25% tariff on imports from India, effective August 27, due to India's direct or indirect importation of Russian Federation oil," a White House statement said. The rupee fell to a three-week low of 87.8050 against the dollar in the domestic spot market, as the tariff news triggered investor sentiment, dealers said. 

However, rise of the dollar/rupee premium was capped as exporters sold forward dollars, to take advantage of the relatively higher premium levels, dealers said. A slight rise of the US Treasury yields also limited the rise of dollar/rupee premium, according to some dealers. 

The yield on the 10-year benchmark US Treasury note rose marginally by 2 basis points to 4.28% on Monday as market participants keenly await the release of Personal Consumption Expenditures Price Index to get clarity on the likely rate-outlook of the US Federal Open Market Committee due next month. 

The core Personal Consumption Expenditures Price Index, the US Federal Reserve's preferred gauge of inflation, is expected to inch up to 2.9% on year in July from 2.8% the month prior, according to economists polled by Dow Jones. Fed Funds Futures traders now see an 83.7% probability of the Fed lowering the benchmark lending rates by 25 basis points at its Sept. 17 meeting, as per the CME FedWatch tool. Forwards of a currency pair is refelctive of the interest rate differential between the two countries. 

Dealers see 2.24% as a key technical support and 1.95% as key resistance for the one-year forward premium in the near-term. At 1249 IST, the one-year exact period dollar/rupee premium was 2.22%, against its previous close of 2.20%. On an absolute basis, the premium was 195.50 paise, against 192.81 paise Monday.  (Gowri Lakshmi)

India Rupee: Remains down on FPI outflows; exporters' dollar sales limit fall

MUMBAI – The rupee remained sharply down against the dollar as banks purchased dollars on behalf of foreign portfolio investors and importers, dealers said. However, a few foreign banks sold the greenback, likely on behalf of exporters, limiting the fall of the rupee, dealers said. Earlier in the day, the rupee hit a three-week low of 87.8050 against the dollar, as importers rushed to purchase the greenback fearing a sharp fall in the rupee ahead of the US tariffs coming into effect, dealers said.

"The tariff pressure is there, they (US) also threatened 200% tariff on China, so the tariff war is intensifying leading to outflows from debt and equity market, pulling the rupee down," a currency trader at a broking firm said. 

Washington on Monday confirmed the additional 25% tariff on Indian products, with the US Customs and Border Protection, Department of Homeland Security, detailing the draft implementation of 50% tariffs on Indian exports to the US. The White House said the move is to restrict Moscow's oil revenue and pressurise Russian President Vladimir Putin to end the ongoing Russia-Ukraine war. 

Banks also purchased dollars for overseas investors, who withdrew funds from domestic financial markets amid the ongoing tariff dispute, and in the absence of a trade deal between New Delhi and Washington, dealers said. At 1119 IST, the benchmark stock indices, the Nifty 50 and the BSE Sensex were down 0.7% each, respectively. 

The rupee also came under pressure as the dollar index recovered from Friday's losses after US Federal Reserve Chair Jerome Powell hinted at a likely interest rate cut next month. At 1119 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.32, broadly steady from 98.43 Monday and up from 97.73 Friday. 

However, a further fall in the rupee was prevented as foreign banks sold the greenback, likely on behalf of exporters, who wanted to take advantage of the relatively higher dollar/rupee levels, dealers said. A few dealers also speculated that the Reserve Bank of India also sold dollars around 87.80 a dollar, which limited the fall of the rupee. 

For the rest of the day, the rupee is seen trading between 87.60 and 87.80 against the dollar. Dealers peg key technical support for the Indian currency at 87.85 a dollar.  (Gowri Lakshmi)

India Rupee: Technical levels for rupee - Aug 26

MUMBAI – At 1029 IST, the rupee was at 87.7525 per dollar. At 0900 IST, the rupee was at 87.7275 a dollar, against the previous close of 87.5800. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Gowri Lakshmi)

India Rupee - Asia FX: Most dn as dlr up; Trump hints at 200% tariff on China

MUMBAI – Most Asian currencies traded lower against the dollar Tuesday as the dollar index rebounded from its losses on Friday after US Federal Reserve Chair Jerome Powell hinted at a possible interest rate cut next month. At 0940 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.38, broadly steady from 98.43 Monday and 97.73 Friday. 

Speaking at the Oval Office, US President Donald Trump insisted that Washington's position was better than Beijing in the ongoing trade dispute. "They have some cards. We have incredible cards," Trump said. "But I don't want to play those cards. If I did, that would destroy China. I'm not going to play those cards." Trump's remarks come days after Beijing and Washington agreed to prolong the trade truce for another 90 days. 
 

Trump also said China has to supply the US with more magnets or "we (the US) have to charge them 200% tariff or something". Trump also threatened to impose additional tariffs and export restrictions on advanced technology and semiconductors in retaliation to digital services taxes that hit American technology companies. The offshore Chinese yuan traded flat against the dollar in early trade. 

The Taiwan dollar fell 0.2% against the dollar. Taiwanese manufacturing business index, published Monday, rose 1.17 points from June to 86.8 last month, its first rebound since February. The Indonesian rupiah and the Thai baht traded flat and the Malaysian ringgit was down 0.2% against the US unit.

The South Korean won was down 0.1% against the greenback ahead of the policy outcome by Bank of Korea, due Thursday. According to a Reuters poll, analysts expect the central bank to keep the key policy rates steady due to rising property prices as aa more immediate concern than lifting economic growth.

The Philippines' peso was down 0.2% against the greenback. The Philippine central bank will meet Thursday for the policy decision, and is widely expected to cut the key lending rates by 25 basis points to support economic growth and amid easing inflation.  (Gowri Lakshmi)

India Rupee: Sharply dn as US issues notice to implement 50% tariff on India

MUMBAI - The rupee opened sharply down against the dollar Tuesday as market participants brace for implementation of the additional 25% tariff by the US, pushing the total tariff on Indian goods to 50%, dealers said. The rupee hit a near three-week low of 87.7725 a dollar shortly after the market opened. 

"Tariff war is what is happening. A lot of traction was there for a strong rupee, but it cannot sustain the gains," a dealer at a private-sector bank said. "Rupee has to gradually weaken, and is immune to any data now." 

The rupee came under pressure as importers rushed to purchase dollars, fearing a sharp fall of the Indian currency during the day as the US confirmed the additional 25% tariff on Indian products which will come into effect 0931 IST, Wednesday. On Monday, the US Customs and Border Protection, Department of Homeland Security, detailed the draft implementation of 50% tariffs on Indian goods. 

The White House said the move is to exert pressure on Russian President Vladimir Putin by restricting Moscow's oil revenues, to put an end to the Russia-Ukraine war. "To address the national emergency stemming from the Government of the Russian Federation's actions taken against Ukraine, he (US President Donald Trump) is imposing an additional 25% tariff on imports from India, effective August 27, due to India's direct or indirect importation of Russian Federation oil," the White House statement said.

The rupee was also weighed as the dollar index rebounded from its losses after US Federal Reserve Chair Jerome Powell hinted at a likely interest rate cut next month. At 0931 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.38, broadly steady from 98.43 Monday and up from 97.73 Friday. 

For the rest of the day, the rupee is seen moving in a range of 87.50-87.90 against the greenback. Dealers peg key technical support for the rupee at 87.85 a dollar.  (Gowri Lakshmi)

India Rupee: Expected range for rupee - Aug 26

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: 

(Gowri Lakshmi and Pratiksha)

End

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

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