More Stories

Informist, Friday, Sept. 5, 2025

By Pratiksha

NEW DELHI – The rupee ended at a record closing low against the dollar on Friday due to greenback purchases for importers and foreign portfolio investors, dealers said. However, the Reserve Bank of India's intervention through dollar sales and a decline in the dollar index kept a lid on the losses, they said. 

"There was not much liquidity in the market today, and whatever buying (of dollars) happened, led to sharp moves in the rupee," a dealer at a state-owned bank said. "The RBI came around 88.36 and kept the rupee there throughout the day."

Dealers said rumours related to US President Donald Trump looking to impose tariffs on Indian information technology sector exports also weighed on the Indian unit.

After hitting a record low of 88.3650 a dollar during the day, the rupee ended at 88.2650 on Friday, against 88.1450 on Thursday. The Indian unit emerged as the worst performer amongst its Asian peers, with most Asian currencies rising 0.1-0.4% against the dollar. The rupee moved in a range of 28 paise during the day. 

The Indian unit opened slightly higher against the dollar as the dollar index fell on increased expectations of a rate cut by the US Federal Reserve after economic data on Thursday indicated labour market conditions were softening in the world's largest economy. 

Data on Thursday showed the number of Americans filing new applications for unemployment benefits increased more than expected last week, while hiring by private employers slowed in August, indicating labour market conditions were softening. Fed funds futures traders are now pricing in a near-100% chance of the Fed cutting interest rates by 25 basis points later this month, up from 87% a week ago, the CME FedWatch Tool showed. 

However, the Indian unit came under downward pressure shortly after opening, erasing all of its gains, as importers stepped in to buy dollars, in order to make the most of the relatively lower dollar/rupee levels, dealers said. However, the dollar purchases were not aggressive in nature, they said. 

Over an hour into trade, traders stepped up their dollar purchases, leading to stop-losses being triggered on short dollar bets at around 88.20, as speculation around Trump possibly looking to impose tariffs on Indian information technology sector exports surfaced. While the rumour took flight, citing reports from global newswires, information on the same had since been deleted and denied, dealers said. 

"The news about Trump tariffs caused a knee-jerk sort of move in the rupee," a dealer at another state-owned bank said. "88.20 was a crucial level, and after that broke, there was sharp movement. That is when RBI came in."

The central bank stepped in to sell dollars at around 88.36 and prevented the Indian unit from falling further, dealers said. The central bank's dollar sales were aggressive in nature, some dealers said. 

"After today, the RBI has kind of set the tone that it will not let the rupee move sharply unnecessarily, unless there are real flows," a dealer at a private-sector bank said. "We should see only a gradual fall in the rupee from here." 

Dealers said foreign banks bought dollars, likely for foreign portfolio investors, which also weighed on the local unit. After the net outflow of $2.52 billion last month, FPIs have taken out $202.6 million from Indian markets so far in September. 

The dollar index fell further during European trade, which also helped the Indian unit pare some of its losses in the last few hours of the trade, according to dealers. At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.97, against 98.26 Thursday and 98.14 Wednesday.

Dealers said volume in the currency market was lacklustre on Friday as bank branches were shut in most parts of India, barring Mumbai city and Mumbai suburban districts, on account of Id-e-Milad. "People who had taken positions for flows had done it for Monday, so there really was not much volume in the market," a dealer at a foreign bank said. Most dealers said thin trading volumes in the market also exacerbated the depreciation in the rupee. 

FORWARDS

The one-year dollar/rupee forward premium ended at a four-month high Friday due to a decline in US Treasury yields on growing expectations of a rate cut by the Fed later this month, dealers said. Forwards of a currency pair are reflective of the interest rate differential between the two countries. 

US Treasury yields fell Thursday across tenors after the US jobless claims data for the week ended Saturday rose to the highest level since June to 237,000. The yield on the US benchmark 10-year Treasury note ended 5 basis points lower at 4.17% Thursday.

On Friday, the yield on the benchmark US Treasury note hovered near a four-month low of 4.16% ahead of the US non-farm payrolls data for August, which will give further cues to the Federal Reserve's rate trajectory. "The next trigger for forwards will be the non-farm payroll report," a dealer at a state-owned bank said. "If it supports rate cut expectations (in the US), it (one-year forward premium) can go above 2.25%."

However, the rupee's sharp fall in the domestic spot market prompted exporters to sell dollars for forward delivery, capping the rise in forward premiums, dealers said.  

Dealers see 2.25% as a strong technical support for the one-year forward premium. At 1530 IST, the one-year exact period dollar/rupee premium was 2.23%, against the previous close of 2.21%. On an absolute basis, the premium was 196.97 paise, against 194.73 paise Thursday.

OUTLOOK

The currency market is closed on Monday for Id-e-Milad. On Tuesday, the rupee will take cues from movement in the dollar index after the release of the US non-farm payroll report later on Friday, dealers said.  

A Reuters poll sees the nonfarm payrolls increasing by 75,000 jobs last month after rising by 73,000 in July. However, market participants will keep a close eye on revisions to June and July payroll counts. Dealers said the dollar index may fall sharply if the non-farm payrolls report comes in weaker than expected, and in turn, lead to appreciation in the rupee.

"Non-farm payrolls is an important data for the market. Last month, it had caused a lot of movement (in the rupee)," a dealer at a private-sector bank said. "If there is some surprising number, we may see volatility in the market next week, as rate cut expectations (in the US) may change considerably." 

Market participants will keep a close eye on developments related to US tariffs. They expect importers to continue to buy dollars due to the expectation that the Indian unit may depreciate further in the near term amid worries related to US tariffs on India, keeping the downward pressure on the rupee intact. 

However, dealers expect the central bank to intervene through dollar sales in case the rupee falls sharply. During the day, the rupee may move in a range of 88.00 and 88.50 against the dollar. Dealers peg key technical support for the rupee at 88.50 a dollar.  

India Rupee - World FX: Yen rises as US lowers tariff on Japan auto imports

MUMBAI – The Japanese yen rose 0.2% against the dollar as US President Donald Trump signed an order Thursday to lower the tariff on Japanese automobile imports and other products that were announced in July. The 15% tariff on Japanese automobile imports, down from the current 27.5%, are set to take effect seven days after the official publication of the order.

The dollar index fell slightly ahead of the key non-farm payrolls data later in the day. Growing expectations of a rate cut by the US Federal Reserve later this month have weighed on the dollar index.

Data Thursday showed the number of Americans filing new applications for unemployment benefits increased more than expected last week, while hiring by private employers slowed in August, indicating labour market conditions were softening in the world's largest economy. 

Data also released Thursday showed the US trade deficit widened sharply in July as record inflows of capital and other goods boosted imports. The trade deficit was posted as $78.3 billion. Economists polled by Reuters had forecast the deficit rising to $75.7 billion.

Fed funds futures traders now see a 99.4% probability of the Fed lowering interest rates by 25 basis points this month, according to the CME FedWatch tool. At 1425 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.06, against 98.26 Thursday and 98.14 Wednesday.

The Australian dollar rose 0.4% against the greenback after data released Thursday showed Australia's trade surplus rose to A$7.3 billion in July, from a revised A$5.4 billion in June. That was well above market forecasts of a A$5.0 billion surplus. The New Zealand dollar rose 0.4% against the dollar. 

Both the euro and the Swiss franc rose 0.3% against the dollar. Data showed Friday German industrial orders unexpectedly fell in July by 2.9% on the previous month on a seasonally and calendar-adjusted basis. A Reuters poll of analysts had pointed to a rise of 0.5%. The pound sterling rose 0.2% against the dollar.  (Rati Chaphekar) 

India Rupee: Forward premiums hit over-1-week high tracking fall in US yields

MUMBAI – The one-year dollar/rupee forward premium hit an over one-week high Friday tracking a decline in US Treausry yields, dealers said. However, banks sold forward dollars on behalf of exporters, which capped the rise of the forward premium levels, dealers said. The domestic currency fell to a lifetime low of 88.3650 against the greenback in the domestic spot market. "There is also receiving by exporters due to higher (fall of) rupee in the spot (market)," a dealer at a broking firm said. 

US Treasury yields fell Thursday across tenors after the US jobless claims data for the week ended Saturday rose to the highest level since June to 237,000. The yield on the US benchmark 10-year Treausry note ended 5 basis points lower at 4.17% Thursday. On Friday, the yield on the benchmark US Treasury note hovered near a four-month low of 4.16% ahead of US non-farm payrolls data for August, which will give further cues to the Federal Reserve's rate trajectory.

Economists project that about 75,000 jobs were added in August, while the jobless rate is seen at 4.3%, according to a Bloomberg estimate. The CME FedWatch tool now shows traders almost fully pricing in a 25-bps rate cut by the Federal Open Market Committee at its September meeting. Forwards of a currency pair are reflective of the interest rate differential between the two countries. 

However, the sharp fall of the rupee in the domestic spot market prompted exporters to sell dollars for forward delivery, which limited the rise of the one-year dollar/rupee forward premium. The rupee fell to a record low against the dollar as dollar purchases by banks on behalf of importers led to stop-losses being triggered on short dollar bets. 

Dealers see 2.25% as a key technical support for the one-year forward premium in the near term. At 1310 IST, the one-year exact period dollar/rupee premium was 2.23%, up from the previous close of 2.20%. On an absolute basis, the premium was 196.55 paise, against 194.73 paise Thursday.  (Gowri Lakshmi)

India Rupee: Technical levels for rupee - Sept 5

MUMBAI – At 1140 IST, the rupee was at 88.3200 per dollar. At 0900 IST, the rupee was at 88.0900 a dollar, against its previous close of 88.1450. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Rati Chaphekar)

India Rupee: Hits record low as importers buy dollars; RBI steps in to cap fall

NEW DELHI – The rupee fell to a record low against the dollar Friday as dollar purchases by banks on behalf of importers led to stop-losses being triggered on short dollar bets at around 88.20 a dollar, dealers said. The Indian unit hit a lifetime low of 88.3650 a dollar. 

However, state-owned banks stepped in to sell dollars, likely on behalf of the Reserve Bank of India, which prevented the Indian currency from falling further, dealers said. "88.20 (a dollar) was holding for a long time, RBI finally let it break today," a dealer at a private-sector bank said. "But then they (RBI) came and sold (dollars) in small lots." 

Some dealers said that dollar purchases were also due to speculation US President Donald Trump was looking to impose tariffs on Indian information technology sector exports. While the rumour took flight citing reports from global newswires, information on the same had since been deleted and denied, dealers said.

Market participants now await the key US non-farm payrolls data, due later in the day, for more cues on the Federal Reserve's rate trajectory. For the rest of the day, the rupee is seen moving in a range of 88.00-88.40 against the greenback. Dealers peg technical support for the rupee at 88.40 a dollar.  (Pratiksha) 

India Rupee: Gives up early gains as importers buy dollars; US jobs data eyed

NEW DELHI – The rupee gave up all its early gains against the dollar as banks bought dollars, likely on behalf of importers, dealers said. The rupee opened slighly higher at 88.0900 a dollar on Friday, but fell to 88.1750 shortly afterwards. 

"There is general buying (of dollars) interest in the market around these levels, but it is a two-way market of late, so, I expect 88.20 to hold today also," a dealer at a private-sector bank said. Importers purchased the greenback, noting the relatively lower dollar/rupee levels, they said. 

The Indian unit opened slightly higher as the dollar index fell slightly on growing expectations of a rate cut in the US this month, dealers said. Data on Thursday showed the number of Americans filing new applications for unemployment benefits increased more than expected last week, while hiring by private employers slowed in August, indicating labour market conditions were softening in the world's largest economy. 

Fed funds futures traders are now pricing in a near-100% chance of the Fed cutting interest rates by 25 basis points later this month, up from 87% a week ago, CME FedWatch showed. At 0950 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.11, against 98.26 Thursday and 98.14 Wednesday.

Meanwhile, most traders expect the rupee to trade in a tight range for most part of the day and volume in the currency market to be lower than usual as bank branches are shut in most parts of India on account of Eid-e-Milad. "There will not be much movement in rupee today as banks in many parts of the country are closed," a dealer at a state-owned bank said. 

Market participants now await the key US non-farm payrolls data, due later in the day, for more cues on the Federal Reserve's rate trajectory. For the rest of the day, the rupee is seen moving in a range of 87.90-88.20 against the greenback. Dealers peg immediate technical support for the rupee at 88.20 a dollar.  (Pratiksha) 

India Rupee - Asia FX: Most up as dollar index dn before jobs data; rupiah falls

MUMBAI – Most Asian currencie rose against the dollar Friday as the dollar index fell slightly ahead of the key non-farm payrolls data later in the day. Asian units also got a boost from a rise in domestic equities. 

Investors' risk appetite increased after US President Donald Trump signed an order on Thursday to implement lower tariffs on Japanese automobile imports and other products that were announced in July. The lower 15% tariffs on Japanese automobile imports, down from the current 27.5%, are set to take effect seven days after the official publication of the order.

The dollar index fell slightly due to growing expectations of a rate cut by the US Federal Reserve later this month. Data on Thursday showed the number of Americans filing new applications for unemployment benefits increased more than expected last week, while hiring by private employers slowed in August, indicating labour market conditions were softening in the world's largest economy. 

Fed funds futures traders now see a 99.3% probability of the Fed lowering interest rates by 25 basis points this month, according to the CME FedWatch tool. At 0920 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.11, against 98.26 Thursday and 98.14 Wednesday.

Data released Friday showed annual inflation in the Philippines rose to 1.5% in August from 0.9% in July, above the forecast of 1.3% in a Reuters poll. The Phillipine peso rose 0.2% against the greenback after the data was released.

The South Korean won rose 0.3% against the greenback after data released Thursday showed the country recorded its largest current account surplus for July on record. South Korea posted a current account surplus of $10.78 billion for July, recording a surplus for the 27th consecutive time. However, the surplus narrowed from $14.27 billion in June.

The Taiwan dollar rose 0.3% against the dollar and Chinese yuan rose 0.1%. The Thai baht rose 0.2% against the greenback even amid political turmoil in the country. The Thai parliament will vote for a new prime minister after royal officials rejected a request by the ruling Pheu Thai Party to dissolve parliament. On Wednesday, the ruling Pheu Thai party said it had sought royal approval to dissolve the parliament for a new election. This was right after the opposition People's Party, which controls nearly a third of lower house seats, said it was supporting the rival Bhumjaithai party's ambitious leader Anutin Charnvirakul for premier. 

Bucking the trend, the Malaysian ringgit traded steady against the greenback after the central bank held its benchmark interest rate steady on Thursday, in line with expectations. Bank Negara Malaysia kept its overnight policy rate at 2.75%, after cutting it for the first time in five years at its previous policy review in July.

The Indonasian rupiah fell 0.1% amid ongoing nationwide protests in the country. Student groups met two senior ministers late on Thursday to press their complaints after more than a week of sometimes violent protests over lawmakers' bonuses and police tactics used against demonstrators.  (Rati Chaphekar)

India Rupee: Expected range for rupee - Sept 5

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 and Rati Chaphekar)

End

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

Edited by Saji George Titus

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2025. All rights reserved.