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Informist, Tuesday, Sept. 16, 2025

By Pratiksha

NEW DELHI – The rupee ended at a near three-week high against the dollar Tuesday as the dollar index weakened sharply ahead of the outcome of the US Federal Open Market Committee meeting, due Wednesday, dealers said. "The dollar index was on the back foot throughout the day, so rupee tracked that like other EMs (emerging market currencies)," a dealer at a private sector bank said. "Seems like the dollar index has more weakness left."

The Indian unit settled at 88.0525 a dollar on Tuesday, appreciating 0.2% compared to the previous close. Other emerging market units gained 0.1-0.6% against the dollar, with the Taiwan dollar being the best performer. 

The domestic unit started the day on a positive note, opening 14 paise higher against the dollar, tracking weakness in the dollar index as investors cemented bets of an interest rate cut by the Federal Reserve this week and more easing even after that.

On Wednesday, the Fed is widely expected to cut rates by 25 basis points after holding them steady at 4.25-4.50% since December. A sharply weak labour market data is the key driver of the ramp-up in easing bets in the world's largest economy in recent weeks. US President Donald Trump Monday renewed calls for faster monetary policy easing, calling for Fed Chair Jerome Powell to go for a "bigger" cut.

Fed funds futures traders are now pricing in a 96.1% chance of the Fed cutting interest rates by 25 bps at the upcoming meeting, with a 3.9% probability of a jumbo 50-bps cut, CME FedWatch showed. "The pressure on the US dollar and the higher Asian currencies has kept rupee in the positive mode this morning as it made a high of 88.01," Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, said in a note. "There was positivity emanating from the US team visiting India for the trade tariff's deal with market hoping for some settlement happening this time." 

New Delhi and Washington are holding the next round of talks on the proposed bilateral trade agreement Tuesday in the national capital. Dealers said optimism over a positive outcome from the trade negotiations also prompted some traders to sell dollars, which supported the local unit. Trump has slapped an additional 25% punitive tariff on Indian goods, on top of a 25% reciprocal tariff, citing New Delhi's continued purchases of Russian crude oil.

Further, some foreign banks sold dollars on behalf of exporters, as they expect the Indian unit to appreciate in the near term owing to weakness in the dollar after the FOMC outcome, dealers said. After hitting a record low of 88.4550 a dollar just last week, the rupee has recovered and found itself on a stronger footing this week. 

The dollar index declined further, hitting an over 10-week low, during European trade, which provided support to the Indian unit, 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 96.98, against 97.34 Monday and 97.62 Friday. 

Further, a sharp rise in domestic equities also boosted the Indian unit, as per dealers. On Tuesday, the Nifty 50 closed at its highest level in more than two months and the BSE Sensex ended at its highest in over a month. Both the Nifty 50 and Sensex closed 0.7% higher on Tuesday. 

While some importers bought the greenback, noting the relatively lower dollar/rupee levels, which kept the Indian unit from appreciating above the big figure of 88-per-dollar, the greenback purchases were not aggressive in nature, dealers said. Most importers remained on the sidelines as they expect the rupee to appreciate further in the near term, they said. "The rupee has been seeing a one-way move, so the appreciation bias is definitely there," a dealer at state-owned bank said. "Importers bought but they were not actively there."

FORWARDS

The one-year dollar/rupee forward premium ended at a near 19-week high due to a fall in US Treasury yields on expectation the US Fed would resume its easing cycle Wednesday and potentially leave the door open to further rate cuts, dealers said. Forwards of a currency pair are reflective of the interest rate differential between the two countries. "The premiums continued to be well bid with the differential rising between US and India one month yields," Bhansali said. 

However, some banks stepped in to sell dollars for forward delivery, noting the relatively higher levels, which limited gains for the forward premiums, some dealers said. The one-year forward premium has risen almost 15 bps so far this month. 

At 1530 IST, the one-year exact period dollar/rupee forward premium was 2.35%, against the previous close of 2.33%. On an absolute basis, the premium was 206.53 paise, against 205.42 paise Monday.

OUTLOOK

On Wednesday, the rupee will take cues from movement in the dollar index ahead of the Fed policy decision, dealers said. Market participants also await the policy outcome of the Bank of Japan and Bank of England, due later this week. Both the central banks are expected to keep rates unchanged.

"It will be the same movement tomorrow (Wednesday) also. The market will find a direction only after FOMC decision," a dealer at a foreign bank said. "I am seeing 87.90 to 88.20 kind of movement."

Market participants will closely watch out for any news related to India-US trade deal negotiations. Dealers said, noting the recent appreciation in the Indian unit, exporters may sell dollars on uptick in dollar/rupee levels, which may support the Indian currency. The expect importers to come in to buy dollars around 87.90 levels. 

They have pegged key technical resistance for the rupee at 87.90 a dollar and support at 88.50. During the day, the rupee may move in a range of 87.90 and 88.30 against the dollar.

India Rupee - World FX: Dlr index at 10-wk low ahead of FOMC outcome; yen up

MUMBAI – The dollar index continued its downturn and hit an over 10-week low ahead of the outcome of the US Federal Open Market Committee's meeting, due Wednesday, dealers said. The dollar index declined on increased bets of an interest rate cut by the Federal Reserve this week and more easing even after that.

Fed funds futures traders are now pricing in a 96% chance of the Fed cutting interest rates by 25 basis points at the upcoming meeting, with a 4% 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 97.02, against 97.34 Monday and 97.62 Friday. The index fell to a low of 97.04 during the day, its lowest level since Jul. 7. The euro rose 0.4% against the dollar. 

The pound sterling rose 0.3% against the greenback despite data released Tuesday showed a job market slowdown in the UK. The basic wage growth in the private sector, a key data point watched by Bank of England, slowed to 4.7% between May and July. Economists polled by Reuters had mostly expected the basic annual wage growth to be 4.8%. Further, the number of payrolled employees fell by a provisional 8,000 in August. July's fall was revised to 6,000 from a previously reported reduction of 8,000. The Bank of England is expected to keep policy rate steady at its meeting due Thursday.

The Japanese yen rose 0.3% against the greenback ahead of the Bank of Japan's policy decision, due Friday, where it is expected to keep interest rates steady and signal cautious optimism as the economy appears to be weathering the hit from US tariffs. Data released Tuesday showed Japan's output gap in the June quarter of 2025-26 (Apr-Jun) was upgraded to 0.3%, its largest since September quarter of FY19, after reflecting a revised gross domestic product data. The gap was previously estimated at 0.1% as of last month.

Further, Japan's farm minister and the chief government spokesperson joined the race Tuesday to lead the ruling party, pledging their candidacies in a vote set for early next month to replace outgoing Prime Minister Shigeru Ishiba.

The Australian dollar traded steady after Reserve Bank of Australia Assistant Governor Sarah Hunter Tuesday said core inflation was coming in broadly in line with forecasts, though there seemed to be less disinflation in prices. Hunter said Australia's economic outlook is balanced at the moment with risks on both upside and downside. The New Zealand dollar also traded steady against the greenback while the Swiss franc rose 0.4%.  (Rati Chaphekar) 

India Rupee: Sharply up as dlr index at 10-wk low; India-US trade talks eyed

India Rupee: Sharply up as dollar index at 10-week low; India-US trade talks eyed

MUMBAI – The rupee rose sharply against the greenback as the dollar index hit an over 10-week low ahead of the outcome of the US Federal Open Market Committee meeting Wednesday, dealers said. The dollar index declined on increased bets of an interest rate cut by the Federal Reserve this week, followed by further easing thereafter.

Fed funds futures traders are now pricing in a 96% chance of the Fed cutting interest rates by 25 basis points at the meeting this month, with a 4% probability of a jumbo 50-bps cut, CME FedWatch showed. At 1315 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.09, against 97.34 Monday and 97.62 Friday. The index fell to a low of 97.04 during the day, its lowest level since Jul. 7.

The Indian unit also got a boost from selling of dollars by traders over optimism about India-US trade negotiations, which are underway Tuesday, dealers said. "There has been some movement on the positive side (for rupee) considering yesterday's (Monday) trade deal news," a dealer at a brokerage firm said.

The risk appetite of investors improved after India's chief negotiator Rajesh Agrawal Monday said New Delhi and Washington would hold the next round of talks on the proposed bilateral trade agreement Tuesday in the national capital. The US has slapped an additional 25% punitive tariff on Indian goods, on top of a 25% reciprocal tariff, citing New Delhi's continued purchases of Russian crude oil.

The rupee rose also as foreign banks sold dollars, likely on behalf of exporters, who wanted to make the most of current dollar/rupee levels, dealers said. Exporters likely sold dollars on expectation that the Indian unit may appreciate against the dollar after the FOMC decision.

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: Technical levels for rupee - Sept 16

MUMBAI – At 1120 IST, the rupee was at 88.0325 per dollar. At 0900 IST, the rupee was at 88.0750 a dollar, against its previous close of 88.2100. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Pratiksha and Rati Chaphekar)

India Rupee: Pares gains as importers buy dlrs; 8-wk low dlr index supports

India Rupee: Pares gains as importers buy dlrs; 8-wk low dlr index supports

MUMBAI – The rupee erased some of its early gains against the dollar as banks stepped in to buy dollars on behalf of importers, noting the relatively lower dollar/rupee levels, dealers said. The Indian unit opened higher against the dollar, tracking weakness in the dollar index and a rise in Asian currencies, they said. The Indian currency opened at 88.0750 a dollar, against the previous close of 88.2100.

The dollar index fell to a near eight-week low in early trade ahead of the outcome of the US Federal Open Market Committee's meeting, due Wednesday. The Fed is widely expected to cut rates by 25 basis points after holding it steady at 4.25-4.50% since December. "The market is reacting to anticipation aroung FOMC (Federal Open Market Committee) meeting," a dealer at a state-owned banks said. "Some positivity around the US-India trade deal has also impacted."

Fed funds futures traders are now pricing in a 95.9% chance of the Fed cutting interest rates by 25 bps at the upcoming meeting, with a 4.1% probability of a jumbo 50-bps cut, CME FedWatch showed. At 0955 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.22, against 97.34 Monday and 97.62 Friday.

Investors' risk appetite also improved after India's chief negotiator Rajesh Agrawal Monday said New Delhi and Washington would hold the next round of talks on the proposed bilateral trade agreement Tuesday in the national capital. "I don't expect 88.00 figure to break that easily. There is still some uncertianty on what will happen with the trade deal," a dealer at another state-owned bank said. The US has slapped an additional 25% punitive tariff on Indian goods, on top of a 25% reciprocal tariff, citing New Delhi's continued purchases of Russian crude oil.

A rise in other Asian currencies, tracking weakness in the dollar index, also supported the Indian unit, dealers said. Asian currencies rose 0.1-0.6% against the greenback, with the Taiwan dollar gaining the most.

For the rest of the day, the rupee is seen moving in a range of 87.90-88.40 against the greenback. Dealers peg key technical resistance for the rupee at 87.90 a dollar.  (Rati Chaphekar)

India Rupee - Asia FX: Rise as dollar index at 8-wk low; Taiwan dlr up 0.6%

MUMBAI – Asian currencies rose against the dollar Tuesday as the dollar index fell to a near eight-week low on bets of an interest rate cut by the Federal Reserve on Wednesday and more easing even after that. The Fed is widely expected to cut rates by 25 basis points after holding it steady at 4.25-4.50% since December. US President Donald Trump Monday renewed calls for faster monetary policy easing, calling for Fed Chair Jerome Powell to go for a "bigger" cut.

Fed funds futures traders are now pricing in a 96% chance of the Fed cutting interest rates by 25 bps at the upcoming meeting, with a 4% probability of a jumbo 50-bps cut, CME FedWatch showed. At 0915 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.23, against 97.34 Monday and 97.62 Friday

The Indonesian rupiah rose 0.3% against the greenback ahead of Bank Indonesia's policy decision on Wednesday, when it is expected to keep rates unchanged. The removal of Finance Minister Sri Mulyani Indrawati rattled investor confidence and weakened the rupiah, which erased most of the gains posted following a trade deal with the US in mid-July. Even after the central bank's interventions, the rupiah had slumped 1%. The rupiah also gained as Indonesia on Monday announced a new economic stimulus package worth $989 million, including food assistance and an infrastructure building programme that could provide temporary work to more than 600,000 people.

The Taiwan dollar rose 0.6% against the dollar, the most among its peers, ahead of the Taiwan central bank's policy decision on Thursday, when it is likely to keep interest rate unchanged because of the robust performance of the tech-focused economy. 

Tracking the dollar index, the Malaysian ringgit and the South Korean won rose 0.4% each and the Philippine peso was up 0.2%. The Thai baht rose 0.1%. Bucking the trend, the Chinese yuan traded steady against the dollar.  (Rati Chaphekar)

India Rupee: Expected range for rupee - Sept 16

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 snd Rati Chaphekar)

End

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

Edited by Vandana Hingorani

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