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Informist, Thursday, Aug. 28, 2025

 

By Pratiksha

 

MUMBAI – The rupee ended off its earlier highs against the dollar Thursday as oil marketing companies and other importers persistently bought the greenback, dealers said. Foreign portfolio outflows from domestic equities also weighed on the local unit, they said.

 

"The broader theme of US tariff is still playing out for rupee depreciation, which is why we are seeing buying (for dollars) at dips (in dollar/rupee)," a dealer at a state-owned bank said. "If 87.80 is not protected too heavily, we may see 88.00 happening in sometime."

 

The Indian unit was supported by broad-based weakness in the dollar index and a rise in other Asian currencies during the day. After touching a high of 87.5100 a dollar, the rupee settled at 87.6250 on Thursday, against 87.6825 on Tuesday. The currency market was closed on Wednesday for Ganesh Chaturthi.

 

Other Asian currencies gained 0.1-0.4% against the US unit. However, the rupee underperformed its peers, emerging as the worst performer in the pack. 

 

The rupee opened sharply higher against the dollar due to a broadly weaker dollar index because of growing expectations of a rate cut by the US Federal Reserve next month and increasing influence of US President Donald Trump on monetary policy actions. 

 

New York Federal Reserve Bank President John Williams said on Wednesday it is likely that interest rates could fall at some point, but policymakers will need to see what upcoming data indicate about the economy to decide if it's appropriate to make a cut at the September meeting. Fed funds futures traders now see an 87.2% probability of the Fed lowering interest rates by 25 basis points next month, 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 98.07, against 98.18 Wednesday and 98.21 Tuesday.

 

Moreover, some dealers speculated that some state-owned banks sold dollars in the offshore non-deliverable forwards markets, possibly on behalf of the Reserve Bank of India, a few minutes before the spot market opened, boosting the Indian currency. 

 

However, gains in the Indian unit ran into dollar demand from importers, shortly after opening. Oil and other importers stepped in to buy dollars, in order to take advantage of the relatively lower dollar/rupee levels, dealers said. Some dollar purchases by importers were also for meeting month-end payment requirements, they said.

 

"Nats (nationalised banks) were buying, mostly for hedging by importers and month-end payments," a dealer at a state-owned bank said. "But even then the 87.80 support was protected." Most dealers expect importers to buy dollars aggressively once the key technical support of 87.80 a dollar breaks for the rupee. 

 

Further, the Indian unit was also weighed by dollar purchases on behalf of FPIs, looking to pull out funds from Indian equities, dealers said. Investors' risk appetite has taken a beating as India now faces a total of 50% tariffs from the US. The 25% tariffs set by the US on imports from India increased to 50% on Wednesday, making it one of the most impacted countries by Washington's duties. So far in August, FPIs have taken out $1.95 billion worth of funds from domestic equities. On Thursday, both the Nifty 50 and Sensex closed 0.9% lower each. 

 

Some dealers speculated that the RBI may have intervened through dollar sales to prevent the Indian unit from falling sharply. However, most expected the central bank to only step in once the rupee moves towards the key support of 87.80 a dollar, as was the case on Tuesday.

 

Meanwhile, some foreign banks stepped in to sell dollars, likely for foreign fund inflows into Indian corporates, which supported the local unit, dealers said. However, state-owned banks stepped up their dollar purchases on behalf of oil importers during the last leg of the trade, following which it touched the day's low of 87.6800.

 

 

	AT 1530 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	87.6250	87.5150	87.5100	87.6800	87.6825
1-year dlr/rupee fwd (paise)	193.16	195.19	195.19	192.66	195.00

 

FORWARDS

The one-year dollar/rupee forward premium erased all gains and ended slightly lower as banks sold forward dollars on behalf of exporters, noting the relatively higher levels, dealers said. The one-year forward premium rose to a near 16-week high of 2.23?rlier in the day, tracking a fall in US Treasury yields, they said. 

 

"It just the US yield based paying happening. Since the rate cut in US now seems more likely than in India," a dealer at another private-sector bank said. "I think in the near term, 2.25% should be the resistance (for the one-year forward premium). Today also, some recieving came around those levels."

 

The benchmark 10-year US Treasury yield fell on Wednesday as traders ramped up bets of a rate cut by the Federal Reserve next month. The 10-year US bond yield declined to 4.24% Wednesday against 4.26% Tuesday. Forwards of a currency pair are reflective of the interest rate differential between the two countries. 

 

Meanwhile, banks stepped in to sell dollars for forward delivery, noting the higher levels, which capped the gains in forward premiums, dealers said. The one-year forward premium has jumped almost 25 bps so far this month. 

 

Dealers see 2.25% as a key technical support for the one-year forward premium in the near term. At 1530 IST, the one-year exact period dollar/rupee premium was 2.20%, against its previous close of 2.21%. On an absolute basis, the premium was 193.16 paise, against 195.00 paise Tuesday.

 

OUTLOOK

On Friday, the rupee will take cues from movement in the dollar index ahead of the US July Personal Consumption Expenditures Price Index data--the US Fed's preferred measure of underlying US inflation, dealers said. The key economic data is due on Friday and will be watched out for cues on Fed's interest rate trajectory.

 

Market participants also await the US Apr-Jun GDP data and US weekly unemployment claims data, both due at 1800 IST. The local unit will also take cues from movement in other Asian currencies.

 

Dealers expect importers to continue buying dollars on fear that the rupee may depreciate further going ahead amid the concerns related to US tariffs on India, dealers said. "I think if rupee continues trading in this range, 88 is not too far and then we will see importers coming aggressively," a dealer at a private-sector bank said. Importers may also buy dollars to meet their month-end payment needs. 

 

The rupee may continue to be weighed by dollar purchases for foreign portfolio outflows amid the weak risk appetite among investors, they said. "We are seeing these levels only because of what is happening on the tariff side," a dealer at a brokerage firm said. "I think 87.50-88.00 range will continue in the near term, unless RBI lets rupee go below 88."

 

Dealers expect the RBI to step in through dollar sales, in case the rupee inches closer to 87.80 levels, and prevent it from testing the psycologically-crucial 88-per-dollar mark. 

 

During the day, the rupee may move in a range of 87.40 and 87.80 against the dollar. Dealers peg key technical support for the rupee at 87.80 a dollar. 

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India Rupee - World FX: Dollar index stays weak on Fed rate cut expectations

 

	AT 1505 IST	HIGH	LOW	PREVIOUS
GBP/USD	1.3505	1.3518	1.3483	1.3496
EUR/USD	1.1648	1.1656	1.1629	1.1634
NZD/USD	0.5869	0.5869	0.5854	0.5855
AUD/USD	0.6523	0.6523	0.6503	0.6502
USD/JPY	147.0990	147.4870	146.9980	147.3670
USD/CAD	1.3769	1.3790	1.3769	1.3788
EUR/JPY	171.3510	171.7450	171.1220	171.4620
CHF/USD	1.2487	1.2489	1.2463	1.2459
EUR/CHF	0.9327	0.9340	0.9323	0.9336

 

MUMBAI - The dollar index remained broadly weak on growing expectations of a rate cut by the US Federal Reserve next month, and increased worries about the independence of the US central bank. New York Federal Reserve Bank President John Williams said on Wednesday it is likely that interest rates could fall at some point, but policymakers will need to see what upcoming data indicate about the economy to decide if it's appropriate to make a cut at the September meeting.

 

Fed funds futures traders now see an 88.7% probability of the Fed lowering interest rates by 25 basis points next month, according to the CME FedWatch tool. Meanwhile, reports said Fed Governor Lisa Cook will file a lawsuit to prevent President Donald Trump from firing her, after the latter's repeated threats around the same. At 1505 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.09, against 98.18 Wednesday and 98.21 Tuesday.

 

European Central Bank policymaker Olli Rehn said in a speech Thursday that Trump's escalating attacks on the Fed could have considerable and global knock-on effects on the financial markets and the real economy. The euro traded broadly steady against the greenback even amid the mounting political instability in France as the current prime minister of France Monday unexpectedly called a confidence vote for next month, which is likely to result in the fall of his minority government.

 

Further, data released Thursday showed growth in Eurozone bank lending accelerated to a fresh two-year high last month on the back of lower interest rates and a gradual economic recovery. Loans to households grew by 2.4% in July, the biggest increase since April 2023, from 2.2% in June. 

 

The pound sterling traded flat against the dollar Thursday. Data released on Wednesday showed downturn in the UK retail sales continued for the eleventh consecutive month in August. A gauge of retail sales showed that compared with a year earlier it was little changed at -32 from July's -34 but better than a dip to -46 in June. The outlook for September improved to -16.

 

The Japanese yen rose 0.2% against the dollar ahead of the release of industrial production, retail sales and consumer confidence data due Friday. Market participants also await Tokyo's inflation print, due Friday, which is a leading gauge of nationwide price trends for Bank of Japan's policy decisions. The Swiss franc rose 0.2% against the greenback Thursday. 

 

The Australian dollar rose 0.3% against the greenback Thursday after data released Wednesday showed that the country's monthly Consumer Price Index rose 2.8% on year in July, compared to an increase of 1.9% in June. This figure came in above the market consensus of 2.3%. The higher-than-expected inflation data dampened market expectations of a rate cut in the September meeting of Reserve Bank of Australia. The New Zealand dollar rose 0.2% against the dollar. (Rati Chaphekar) 

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India Rupee: Premium comes off 16-wk high as exporters sell forward dollars

 

	AT 1305 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	87.6100	87.5150	87.5100	87.6750	87.6825
1-year dlr/rupee fwd (paise)	193.66	195.19	195.19	193.08	195.00

 

India Rupee: Premium comes off 16-wk high as exporters sell forward dollars

 

MUMBAI – The one-year dollar/rupee forward premium came off its earlier high as banks sold forward dollars on behalf of exporters, noting the relatively higher levels, dealers said. The one-year forward premium rose to a near-16-week high of 2.23?rlier in the day, tracking a fall in US Treasury yields, they said. 

 

"Overall, the paying activity has continued because now it seems sure that US will have a rate cut before India. There is no clarity on when RBI (Reserve Bank of India) will cut rates next," a dealer at a private-sector bank said. 

 

The benchmark 10-year US Treasury yield fell on Wednesday as traders ramped up bets of a rate cut by the Federal Reserve next month. The 10-year US bond yield declined to 4.24% Wednesday against 4.26% Tuesday. 

 

Forwards of a currency pair is reflective of the interest rate differential between the two countries. Fed funds futures traders now see an 87.2% probability of the Fed lowering interest rates by 25 basis points next month, according to the CME FedWatch tool. 

 

Meanwhile, banks stepped in to sell dollars for forward delivery, noting the higher levels, which capped the gains in forward premiums, dealers said. "These high levels are getting received, especially in the near forward tenures," a dealer at a brokerage firm said. "I think 2.25% is the peak for (one-year forward premium) now." The one-year forward premium has jumped almost 25 bps so far this month. 

 

Dealers see 2.25% as a key technical support for the one-year forward premium in the near-term. At 1305 IST, the one-year exact period dollar/rupee premium was 2.21%, unchanged from its previous close. On an absolute basis, the premium was 193.66 paise, against 195.00 paise Tuesday. The currency market was closed on Wednesday for Ganesh Chaturthi. (Pratiksha)

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India Rupee: Gives up most gains as banks buy dollars for oil cos, importers

 

	AT 1215 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	87.6575	87.5150	87.5100	87.6725	87.6825

 

MUMBAI – The rupee erased most of its early gains against the dollar as banks bought the greenback on behalf of oil marketing companies and other importers, noting the relatively lower dollar/rupee levels, dealers said. The rupee touched a high of 87.5100 a dollar earlier in the day. 

 

"There was consistent buying (of dollars) after it opened around 87.51," a dealer at a private-sector bank said. "I think it (rupee) will hold around 87.70 (a dollar), but if it breaks, we may see 87.80 kind of levels."

 

Some dealers said the Indian currency was also weighed down by dollar purchases for foreign portfolio outflows from domestic equities. Risk sentiment among investors has dampened amid the levy of 50% US tariffs on India, effective Wednesday. At 1215 IST, the Nifty 50 and Sensex were down 0.3% and 0.4%, respectively. 

 

Meanwhile, some dealers speculated that the Reserve Bank of India may have stepped in to sell dollars to prevent the Indian currency from depreciating sharply. However, some expect the central bank to only step in once the rupee moves towards the key support of 87.80 a dollar, as was the case on Tuesday. The rupee held on to the 87.80 mark on Tuesday, all thanks to the central bank's intervention.  

 

The rupee rose sharply against the dollar in early trade due to broad-based weakness in the dollar index as traders ramped up bets of a rate cut by the Federal Reserve next month. At 1215 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.14, against 98.18 Wednesday and 98.21 Tuesday.

 

For the rest of the day, the rupee is seen moving in a range of 87.40-87.80 against the greenback. Dealers peg key technical resistance for the rupee at 87.40 a dollar and immediate support at 87.70. (Pratiksha)

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India Rupee: Technical levels for rupee - Aug 28

 

MUMBAI – At 1125 IST, the rupee was at 87.6275 per dollar. At 0900 IST, the rupee was at 87.5150 a dollar, against the previous close of 87.6825. 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	87.90	87.80	87.20	87.00
Foreign bank	88.00	87.85	87.30	87.10
Brokerage firm	88.00	87.80	87.40	87.20
Brokerage firm	87.95	87.80	87.40	87.20

 

(Pratiksha)

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India Rupee: Rises as dollar index remains broadly weak, Asian currencies up

 

	AT 0933 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	87.5900	87.5150	87.5150	87.5950	87.6825

 

MUMBAI – The rupee rose against the dollar on Thursday, in line with its Asian peers, as the dollar index remained broadly weak on growing expectations of a rate cut by the US Federal Reserve next month, and increased worries about the independence of the US central bank, dealers said. The rupee opened at 87.5150 a dollar, against 87.6825 on Tuesday. The currency market was closed on Wednesday for Ganesh Chaturthi.

 

"There was some pullback in the Asian currencies (which led to the gap down opening in dollar/rupee)," a dealer at a private-sector bank said. "I expect bids (dollar buying) to come around 87.45 (a dollar)." Other Asian currecies rose 0.1-0.4% against the dollar, with the South Korean won being the biggest gainer. 

 

New York Federal Reserve Bank President John Williams said on Wednesday it is likely that interest rates could fall at some point, but policymakers will need to see what upcoming data indicate about the economy to decide if it's appropriate to make a cut at the September meeting. Fed funds futures traders now see an 88.7% probability of the Fed lowering interest rates by 25 basis points next month, according to the CME FedWatch tool. 

 

Meamwhile, reports said Fed Governor Lisa Cook will file a lawsuit to prevent President Donald Trump from firing her, after the latter's repeated threats around the same. At 0930 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.14, against 98.18 Wednesday and 98.21 Tuesday.

 

Further, some dealers said a few banks sold dollars in the offshore non-deliverable forwards markets, just before the opening of the spot market, which also boosted the Indian unit. Some dealers speculated that the dollar sales were possibly on behalf of the Reserve Bank of India. 

 

However, importers stepped in to buy dollars, likely to take advantage of the relatively lower dollar/rupee levels or to meet their month-end payment requirements, which capped gains for the Indian currency, dealers said. 

 

For the rest of the day, the rupee is seen moving in a range of 87.40-87.80 against the greenback. Dealers peg key technical resistance for the rupee at 87.40 a dollar. (Pratiksha)

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India Rupee - Asia FX: Most up on weak dlr index; South Korean won up 0.4%

 

MUMBAI – Most Asian currencies rose against the dollar Thursday, as the dollar index remaind subdued on rising expectations of an interest rate cut by the US Federal Reserve in September.

 

New York Federal Reserve Bank President John Williams said Wednesday it is likely that interest rates could fall at some point, but policymakers will need to see what upcoming data indicate about the economy to decide if it's appropriate to make a rate cut at the September meeting. Moreover, US President Donald Trump's recent threats to fire Fed Governor Lisa Cook has led to investors questioning the independence of the US central bank, which also weighed on the dollar index.  

 

Fed funds futures traders are now pricing in an 88% probability of a 25-basis-point cut at the US central bank's meeting next month, according to the CME Group's FedWatch Tool. At 0815 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.06, against 98.18 Wednesday and 98.21 Tuesday. 

 

The Taiwan dollar rose 0.2% against the greenback while the Malaysian ringgit rose 0.1%. The South Korean won rose 0.4% against the dollar after the Bank of Korea kept its interest rate unchanged at 2.50% for the second consecutive time Thursday. The move was also in line with expectations of economists polled by Reuters.

 

The Philippine peso traded slightly higher against the dollar, up 0.1%, ahead of the Bangko Sentral ng Pilipinas' policy decision due Thursday, where the central bank is expected to slash the interest rate by 25 bps, according to a poll by Reuters. The Thai baht and Indonesian rupiah rose 0.2% and 0.1% against the dollar, respectively. Bucking the trend, the Chinese yuan was broadly steady against the greenback.  (Rati Chaphekar) 

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India Rupee: Expected range for rupee - Aug 28

 

MUMBAI – 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	87.80	87.40
State-owned bank	87.90	87.50
Private-sector bank	87.80	87.30
Brokerage firm	87.78	87.48
Brokerage firm	87.80	87.40
Brokerage firm	87.65	87.46

 

 

 

 

 

 

 

 

 

(Pratiksha)

 

End

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

 

Edited by Vandana Hingorani

 

 

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