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Informist, Tuesday, Sept. 9, 2025

By Pratiksha

NEW DELHI – The rupee ended sharply higher against the dollar Tuesday but trimmed a considerable portion of its gains as banks persistently bought dollars on behalf of importers, dealers said. Weakness in the dollar index supported the Indian currency, they said. "We saw buying (of dollars) through the day," a dealer at a state-owned bank said. "There's no way these (rupee) levels could have sustained."

After hitting a high of 87.9500 a dollar earlier in the day, the rupee settled at 88.1025 on Tuesday, against 88.2650 on Friday. The currency market was closed on Monday for Id-e-Milad. The Indian currency traded in a range of 23 paise during the day. 

The Indian unit began the day on a positive note, opening 27 paise higher against the dollar, as the dollar index tumbled to a near seven-week low after Friday's weak US non-farm payrolls report cemented bets of an interest rate cut in the US next week, even fuelling hopes of a 50-basis-point cut, dealers said. 

Data Friday showed US job growth weakened in August and the unemployment rate increased to nearly a four-year high of 4.3%, confirming that labour market conditions were softening in the world's largest economy. Non-farm payrolls increased by only 22,000 jobs last month after rising by an upwardly revised 79,000 in July. Economists polled by Reuters had forecast that payrolls would rise by 75,000 jobs after a previously reported gain of 73,000 in July.

Fed funds futures traders are now pricing in an 88.2% chance of the Fed cutting interest rates by 25 basis points next week, with an 11.8% probability of a jumbo 50 bps cut, CME FedWatch showed. At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.28, against 97.44 Monday and 97.74 Friday. The index fell to 97.25 during the day, its lowest level since Jul. 24.

Dealers said the rupee may receive a further boost in the coming days, towards 87.80 a dollar, if the decline in the dollar index persists. A rise in other Asian currencies also supported the local unit, they said. Barring the Philippine peso and the Indonesian rupiah, other Asian units gained 0.1-0.4% against the dollar. 

Shortly after opening, gains in the Indian unit ran into dollar demand from importers, who wanted to make the most of the relatively lower dollar/rupee levels, dealers said. The rupee fell to a lifetime low of 88.3650 a dollar on Friday. Some dealers said the demand from importers was also strong as the currency market was closed on Monday. 

"Today was sort of a momentary relief for the rupee, since fundamentals were at play," a dealer at a private-sector bank said. "But I don't think this will translate into a long-term appreciation trend. We have been seeing demand (for dollars) at these dips (in dollar/rupee)." 

Dealers said some banks also likely bought dollars on behalf of foreign portfolio investors, looking to pull out funds from Indian markets amid the uncertainty over India-US tariff negotiations. However, some dealers said risk appetite among investors improved slightly after positive comments on India from US President Donald Trump on Friday. Amid the ongoing trade tensions between the two countries, Trump on Friday said India and the US have a very special relationship, and "there is nothing to worry about". Responding to this, Prime Minister Narendra Modi said in a post on X Saturday that India and the US have a very positive and forward-looking comprehensive and global strategic partnership. 

A rise in domestic equities also supported the Indian unit, according to dealers. On Tuesday, both the Nifty 50 and Sensex ended 0.4% higher each. 

FORWARDS

The one-year dollar/rupee forward premium ended at a four-month high due to a sharp fall in US Treasury yields after Friday's soft US non-farm payrolls report cemented bets of an interest rate cut in the US next week, dealers said. Forwards of a currency pair are reflective of the interest rate differential between the two countries.

The 10-year US bond yield fell to 4.05% Monday, down from 4.10% Friday and 4.17% Thursday. Market participants now await the release of preliminary benchmark revisions for US jobs data covering the period from April 2024 to March 2025, due later in the day. They also await the US producer price index on Wednesday and consumer price index data on Thursday for more cues on the quantum of rate cuts by the Fed this year. 

Meanwhile, some banks stepped in to sell dollars for forward delivery, noting the relatively higher levels, which limited gains in the forward premiums, dealers said. At 1530 IST, the one-year exact period dollar/rupee premium was 2.29%, against the previous close of 2.23%. On an absolute basis, the premium was 201.65 paise, against 196.97 paise Friday. 

OUTLOOK

On Wednesday, the rupee will take cues from movement in the dollar index after the release of preliminary benchmark revisions for US jobs data, dealers said. Economists expect a downward revision of as many as 800,000 jobs, which could indicate that the Fed is behind the curve in efforts to achieve maximum employment, Reuters said.

The local unit will also take cues from movement in other Asian currencies, they said. Market participants will continue to keep a close eye on developments related to US tariffs.

Dealers expect importers to continue buying dollars owing to the expectation that the Indian unit may depreciate in the near term amid worries related to US tariffs on India, keeping the downward pressure on the rupee intact. "Rupee has not been able to stay above 88 (a dollar) and seems like it will not be able to," a dealer at a brokerage firm said. "I think only if it closes above 88, we can see some near-term appreciation in the rupee."

During the day, the rupee may move in a range of 87.90 and 88.30 against the dollar. Dealers peg key technical resistance for the rupee at 87.90 a dollar.  

India Rupee - World FX: Dlr index hovers near 7-wk low on Fed rate cut bets

MUMBAI – The dollar index hovered close to the seven-week low as expectations of a 50-basis points rate cut in the US were fuelled after data released Friday showed US jobs growth weakened sharply in August and the unemployment rate increased to nearly a four-year high of 4.3%, confirming that labour market conditions in the US were softening.

US non-farm payrolls increased by only 22,000 jobs last month after rising by an upwardly revised 79,000 in July. Economists polled by Reuters had forecast that payrolls would rise by 75,000 jobs after a previously reported rise of 73,000 in July. Fed funds futures traders are now pricing in an 89.4% chance of the Fed cutting interest rates by 25 basis points later this month, with a 10.6% probability of a jumbo 50 bps cut, CME FedWatch showed. At 1500 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.28, against 97.44 Monday and 97.74 Friday.

The pound sterling rose 0.2% against the dollar and the Australian dollar was up 0.3%. The New Zealand dollar and the Swiss franc rose 0.2% against the dollar.

The yen rose 0.3% against the dollar after Japan's chief trade negotiator Ryosei Akazawa said in a post on X Tuesday that US tariffs on Japanese automobiles are set to be lowered by Sept. 16, resolving uncertainty over the implementation of trade deal chalked out in July. Washington struck a trade deal with Tokyo in July, agreeing to reduce tariffs to 15% on Japanese goods, including automobiles, in exchange for a $550 billion package of US-bound investments and loans.

However, the yen's rise was capped owing to the ongoing political uncertainty in the country after Japan's Prime Minister Shigeru Ishiba stepped down on Sunday, following weeks of growing pressure stemming from his national election loss late last year. The appointment of a new Japanese prime minister next month could give Bank of Japan more reasons to go slow on its next interest rate hike, especially if the next leader is wary of seeing borrowing costs rise too quickly.

The euro was broadly steady against the greenback despite weak export data from Germany, Europe's largest economy, and political turmoil in France. Data released Monday showed Germany's exports unexpectedly fell in July on a sharp decline in US demand due to Washington's tariffs on European imports. The exports fell by 0.6% in July from June. A Reuters poll had forecast an increase of 0.1%.

France is facing a political crisis with the defeat of Prime Minister Francois Bayrou in a confidence vote in the National Assembly on Monday. France is thus set to get its fifth prime minister in less than two years. (Rati Chaphekar)

India Rupee: Erases some gains as importers buy dlrs; weak dlr index helps

MUMBAI – The rupee erased some of its early gains against the dollar as banks persistently bought dollars on behalf of importers, noting the relatively lower dollar/rupee levels, dealers said. The Indian unit had risen to 87.9500 a dollar earlier in the day. 

"I expected it (dollar/rupee) to remain low, but bids (dollar buys) came in as market was closed on last three days," a dealer at a state-owned bank said. "The fall in dollar index has supported the fall (in dollar/rupee) a bit." The currency market was closed on Monday for Id-e-Milad. 

The rupee rose above the 88-per-dollar mark in early trade as the dollar index fell sharply after data showed US job growth weakened in August and the unemployment rate increased to nearly a four-year high of 4.3%, confirming that labour market conditions were softening in the world's largest economy and cementing bets of a rate cut by the US Federal Reserve next week. 

Fed funds futures traders are now pricing in an 88.2% chance of the Fed cutting interest rates by 25 basis points later this month, with an 11.8% probability of a jumbo 50 bps cut, CME FedWatch showed. At 1312 IST, the dollar index, which measures the strength in the dollar against a basket of six major currencies, was at 97.37, against 97.44 Monday and 97.74 Friday. The index fell to 97.26 during the day, its lowest level since Jul. 24.

A rise in domestic equities also supported the rupee, according to some dealers. At 1312 IST, both the Nifty 50 and Sensex were 0.4% higher each.

Market participants now await the US producers price index on Wednesday and consumer price index data on Thursday for more cues on whether the Fed will go for a 25-basis-point rate cut or a jumbo 50-bps cut this month. For the rest of the day, the rupee is seen moving in a range of 87.90-88.30 against the greenback. Dealers peg key technical resistance for the rupee at 87.90 a dollar.  (Rati Chaphekar)

India Rupee: Fwd premium hits 4-mo high as US ylds fall on Fed rate cut bets

NEW DELHI – The one-year dollar/rupee forward premium jumped to a four month high due to a sharp fall in US Treasury yields after Friday's soft US non-farm payrolls report cemented bets of an interest rate cut in the US next week, dealers said. Forwards of a currency pair are reflective of the interest rate differential between the two countries.

"The US non-farm payroll data is the immediate trigger for forwards and 2.25% has finally breached (for the one-year forward premium)," a dealer at a state-owned bank said. "I think the support level should be around 2.30-2.35% for now, unless 50 bps cut (in the US) come into picture in a bigger way."

The 10-year US bond yield fell to 4.05% Monday against 4.10% Friday and 4.17% Thursday. Data showed US job growth weakened in August and the unemployment rate increased to nearly a four-year high of 4.3%, confirming that labour market conditions were softening in the world's largest economy. Non-farm payrolls increased by only 22,000 jobs last month after rising by an upwardly revised 79,000 in July. Economists polled by Reuters had forecast that payrolls would rise by 75,000 jobs after a previously reported gain of 73,000 in July.

Fed funds futures traders are now pricing in an 89.4% chance of the Federal Reserve cutting interest rates by 25 basis points later this month, with a 10.6% probability of a jumbo 50 bps cut, CME FedWatch Tool showed. Market participants now await the release of preliminary benchmark revisions for US jobs data covering the period from April 2024 to March 2025, due later in the day. They also await the US producers price index on Wednesday and consumer price index data on Thursday for more cues on quantum of rate cuts by the Fed this year. 

Meanwhile, some banks stepped in to sell dollars for forward delivery, noting the relatively higher levels, which limited gains in the forward premiums, dealers said. "We are seeing some offers around these levels, but not a lot, since some clarity on the quantum of rate cut (in the US) is still needed," a dealer at a private-sector bank said.

At 1245 IST, the one-year exact period dollar/rupee premium was 2.29%, against the previous close of 2.23%. On an absolute basis, the premium was 202.15 paise, against 196.97 paise Friday. The currency market was closed on Monday for Id-e-Milad. (Pratiksha)

India Rupee: Technical levels for rupee - Sept 9

MUMBAI – At 1100 IST, the rupee was at 88.0675 per dollar. At 0900 IST, the rupee was at 88.0000 a dollar, against its previous close of 88.2650. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Rati Chaphekar)

India Rupee: Surges as dollar index hits 7-week low on US Fed rate cut bets

NEW DELHI – The rupee surged against the dollar, moving above the 88-per-dollar mark, as the dollar index hit a near seven-week low after Friday's weak US non-farm payrolls report cemented bets of an interest rate cut in the US this month, even fuelling hopes of a 50-basis-point cut, dealers said. "The weak dollar theme should play out through out the day," a dealer at a state-owned bank said. "I am seeing support around 87.80 (a dollar) but, it really depends on the kind of flows we will see during the day."

The dollar index fell sharply after data showed US job growth weakened in August and the unemployment rate increased to nearly a four-year high of 4.3%, confirming that labour market conditions were softening in the world's largest economy. Non-farm payrolls increased by only 22,000 jobs last month after rising by an upwardly revised 79,000 in July. Economists polled by Reuters had forecast that payrolls would rise by 75,000 jobs after a previously reported gain of 73,000 in July.

Fed funds futures traders are now pricing in an 89.4% chance of the Fed cutting interest rates by 25 basis points later this month, with a 10.6% probability of a jumbo 50 bps cut, CME FedWatch showed. At 0922 IST, the dollar index, which measures the strength in the dollar against a basket of six major currencies, was at 97.41, against 97.44 Monday and 97.74 Friday. The index fell to 97.32 in early trade, its lowest level since Jul. 24.

A rise in domestic equities also supported the Indian unit, according to some dealers. At 0922 IST, both the Nifty 50 and Sensex were up 0.4% each. "While softer US data and potential Fed policy shifts could provide some support to the rupee, India's trade and tariff headwinds may cap any recovery, keeping upside risks intact," said Amit Pabari, managing director at CR Forex, said in a note. 

Dealers expect importers to step in through dollar purchases, noting the relatively lower dollar/rupee levels, limiting gains for the Indian currency. The Indian unit fell to a record low of 88.3650 a dollar on Friday. The currency market was closed on Monday for Id-e-Milad. 

For the rest of the day, the rupee is seen moving in a range of 87.80-88.20 against the greenback. Dealers peg immediate technical resistance for the rupee at 87.80 a dollar. (Pratiksha) 

India Rupee - Asia FX: Mixed before US econ data; Indonesian rupiah drops 1%

MUMBAI – Asian currencies moved on a mixed note against the US dollar as market participants now await the US producers price index on Wednesday and consumer price index data on Thursday for more cues on whether the Federal Reserve will go for a 25-basis-point rate cut or a jumbo 50-bps cut this month. 

Expectations of a 50-bps rate cut were fuelled after data released Friday showed US job growth weakened sharply in August and the unemployment rate increased to nearly a four-year high of 4.3%, confirming that labour market conditions were softening. 

Fed funds futures traders are now pricing in an 89.4% chance of the Fed cutting interest rates by 25 basis points later this month, with a 10.6% probability of a jumbo 50 bps cut, CME FedWatch showed. At 0830 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.36, against 97.44 Friday and 98.26 Thursday.

The Indonesian rupiah fell 1% against the greenback after the abrupt dimissal of the country's finance minister amid the ongoing political chaos. The Indonesian government removed finance minister Sri Mulyani Indrawati in a cabinet reshuffle on Monday. The announcement came after two weeks of protests and unrest across the country, which have included calls for a fairer taxation system. The Philippine peso fell 0.1% against the dollar. 

The Thai baht rose 0.2% against the greenback after the political situation in the country stabilised post weeks of uncertainty. Thailand's Anutin Charnvirakul was elected prime minister on Friday after breezing through a parliamentary vote, trouncing the candidate of the Shinawatra family's once-dominant ruling party to end a week of chaos and political deadlock. The Malaysian ringgit also rose 0.2% against the dollar. The Taiwan dollar rose 0.2% against the greenback, while the Chinese yuan rose 0.1%. The South Korean won traded broadly steady against the greenback.  (Rati Chaphekar) 

India Rupee: Expected range for rupee - Sept 9

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: 

(Pratiksha and Rati Chaphekar)

End

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

Edited by Saji George Titus

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