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Informist, Thursday, Sept. 18, 2025

By Pratiksha

NEW DELHI – The rupee ended sharply lower against the dollar Thursday, snapping its four-day gaining streak, as the dollar index recovered from a three-and-a-half-year low and importers persistently bought the greenback, dealers said.

"People had kind of overpriced the dovishness from FOMC (Federal Open Market Committee), but the dollar got a boost after (Fed Chair Jerome) Powell's comments, which is why it (rupee) fell sharply," a dealer at a state-owned bank said. "I think there will be a slow grind higher (for dollar/rupee) from here."

The Indian currency ended at 88.1275 a dollar on Thursday, 0.4% lower compared to the previous close. Other Asian currencies fell 0.1-0.7% against the dollar, with the South Korean won being the worst hit.

The rupee opened sharply lower at 87.9700 a dollar and fell below the 88-per-dollar mark shortly after opening, as the dollar index rebounded after Federal Reserve Chair Jerome Powell said the committee did not seriously consider a 50-basis-point rate cut at the meeting, adding that the central bank does not need to rush easing.

The dollar index had dropped to its lowest level since February 2022 after the FOMC on Wednesday voted to reduce the federal funds target rate range by 25 basis points to 4.00-4.25%, and guided for 50 bps of additional cuts this year. However, the dollar index sprang back following Powell's comments as he left investors unsure about the pace of the Fed's future moves. 

At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 96.92, against 97.02 Wednesday and 96.66 Tuesday. The index fell to a low of 96.22 on Wednesday, its lowest level since February 2022. A decline in other Asian currencies also weighed on the Indian unit, as per dealers. 

Noting the sharp fall in the rupee at open, banks stepped in to purchase dollars on behalf of oil marketing companies and other importers, which further exerted downward pressure on the local unit, dealers said. Following this, the Indian unit touched the day's low of 88.1575 a dollar. "There was a lot of buying interest (in dollars) today," a dealer at a private-sector bank said. "I don't see a downside (for dollar/rupee) as long as there's no positive on the US tariff talk."

Most dealers noted that, given the sharp rise in the rupee over the last few days, most importers had refrained from buying dollars in large quantities, expecting the Indian unit to rise further. However, after Thursday's depreciation, they persistently bought the greenback in fear that the rupee will fall further going ahead. "Importers who did not buy (dollars) in the last few days definitely missed the bus," the dealer at a private-sector bank said.   

Meanwhile, some banks also sold dollars on behalf of foreign portfolio investors, looking to invest in Indian markets, which limited losses for the Indian currency, dealers said. Further, a rise in domestic equities also provided some cushion to the rupee, they said. On Thursday, both the Nifty 50 and Sensex ended 0.4% higher each.

Meanwhile, Chief Economic Adviser to the finance ministry V. Anantha Nageswaran said Thursday that the US may soon scrap the 25% penal tariff imposed on Indian goods and also lower the reciprocal tariff to 10-15% from the current 25%, adding that he expects the tariff situation to be resolved in 8-10 weeks. This also provided support to the Indian unit, according to dealers. 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. 

"I think people are not going too long (on rupee) or too short (on rupee) solely because of the uncertainty that is there from the trade deal side," a dealer at a foreign bank said. "Once there is clarity on that, we may be able to see a one-sided move."

FORWARDS

The one-year dollar/rupee forward premium ended off its earlier lows as banks stepped in to buy dollars for forward delivery on behalf of importers, who feared a further depreciation in the rupee, dealers said. 

The one-year forward premium fell to 2.33% earlier in the day as US Treasury yields rose Wednesday after Federal Reserve Chair Jerome Powell adopted a measured rhetoric on further policy easing. The 10-year US bond yield rose to 4.06% Wednesday, against 4.04% Tuesday. Forwards of a currency pair are reflective of the interest rate differential between the two countries.

"I think 2.50% will be a good support for the one-year (forward premium) and some amount of paying will continue in the near term," a dealer at a brokerage firm said.

At 1530 IST, the one-year exact period dollar/rupee forward premium was 2.36%, against the previous close of 2.37%. On an absolute basis, the premium was 208.23 paise against 208.87 paise Wednesday. 

OUTLOOK

On Friday, the rupee will take cues from movement in the dollar index and other Asian currencies, dealers said. "The dollar index will find support around 97.70, but if it breaks, we can see 99.00 happening," a dealer at a private-sector bank said. "But it depends on whether the current dollar strength will sustain."

Market participants will continue to closely watch out for any news related to India-US trade deal negotiations. Any positive development on this front will likely lead to the rupee rising above the 88-per-dollar mark, they said. "Even if dollar weakness happens, the rupee will gain sustainably only if there are incremental flows," the dealer at a foreign bank said. "Flows may only come once there is a beneficial trade deal for us." 

Dealers expect importers to continue buying dollars around the current dollar/rupee levels, due to fears of a further fall in the domestic unit, weighing on the rupee. They have pegged key technical support for the rupee at 88.20 a dollar and resistance at 87.70. During the day, the rupee may move in a range of 87.90 and 88.30 against the dollar.

India Rupee - World FX:Dlr recovers after Fed decision; New Zealand dlr down

MUMBAI – The dollar index rebounded from the three-and-a-half-year low it hit Wednesday as traders pared aggressive rate-cut bets after US Federal Reserve Chair Jerome Powell's comments indicated a measured approach to further monetary policy easing.

The US Federal Reserve lowered the Federal funds rate target by 25 basis points, taking the range to 4.00-4.25%, after keeping it unchanged for five consecutive meetings. Fed officials guided for the rate to be at 3.50-3.75% by the end of this year, 50 bps lower than the current rate. However, Powell said the committee did not seriously consider a 50-bp rate cut at its meeting, raising questions about the depth and persistence of rate cuts by the Fed in future.

At 1440 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 96.99, against 97.02 Wednesday but up from 96.66 Tuesday. The index fell to a low of 96.22 Wednesday after the Fed decision, its lowest level since February 2022.

The New Zealand dollar fell 0.9% against the greenback as the country's economy shrank more than expected in Apr-Jun. Data Thursday showed GDP growth fell 0.9% in the June quarter from the trailing quarter, worse than analysts' and the Reserve Bank of New Zealand's forecasts of a 0.3% fall. Annual GDP decreased 0.6%, while the market had expected it to remain unchanged. The weaker-than-expected economic data led to expectations of a rate cut by the New Zealand central bank in October.

The Australian dollar fell 0.2% against the dollar after data Thursday showed employment fell 5,400 in August from July, when it rose a revised 26,500. This was far below market forecasts of a gain of 21,500. Annual jobs growth has slowed to 1.5%, from 3.5% in January. 

The pound sterling was steady against the dollar ahead of the Bank of England's meeting Thursday, where it is widely expected to keep interest rates at 4% after reducing it by 25 bps in August. Data released Wednesday showed the UK's inflation at an annual 3.8% in August, the same pace as in July and in line with a Reuters poll. The euro rose 0.1% against the greenback.

The Japanese yen fell 0.1% 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. Meanwhile, former central bank executive Tomoyuki Shimoda Thursday said the BoJ could raise interest rates in October even if Sanae Takaichi, a proponent of aggressive monetary easing, wins the ruling party's leadership contest scheduled for Oct. 4.  (Rati Chaphekar)

India Rupee: Forward premium comes off lows as importers buy forward dollars

NEW DELHI – The one-year dollar/rupee forward premium came off lows hit earlier, as banks stepped in to buy dollars for forward delivery on behalf of importers, who feared a further depreciation in the rupee, dealers said. The Indian unit slumped against the dollar in the spot market due to a recovery in the dollar index, dealers said.

"Even after rise in US yields, we can see paying as spot (dollar/rupee) moved higher and importers are active," a dealer at a private sector bank said. "2.40% level (for one-year forward premium) should find some resistance." 

The one-year forward premium fell to 2.33% earlier in the day as US Treasury yields rose Wednesday after Federal Reserve Chair Jerome Powell adopted a measured rhetoric on further policy easing. The US Federal Open Market Committee Wednesday cut the target range for the federal funds rate by 25 basis points to 4.00-4.25%, and guided for 50 bps of additional cuts this year. However, Powell called the policy action as a "risk-management" cut in response to the weakening labour market, adding that the central bank is in a "meeting-by-meeting situation" regarding the outlook for interest rates. This led to market participants being uncertain about the depth and persistence of future rate cuts by the Fed. 

The 10-year US bond yield rose to 4.06% Wednesday, against 4.04% Tuesday. Forwards of a currency pair are reflective of the interest rate differential between the two countries.

At 1350 IST, the one-year exact period dollar/rupee forward premium was 2.36%, against the previous close of 2.37%. On an absolute basis, the premium was 207.81 paise against 208.87 paise Wednesday. (Pratiksha)

India Rupee: Slumps on dollar buys by importers, recovery in dollar index

MUMBAI – The rupee slumped against the dollar Thursday as banks continuously bought the greenback on behalf of importers and the dollar index recovered from its three-and-a-half year low hit on Wednesday after the Federal Open Market Committee outcome, dealers said. 

"The appreciation (of rupee) that we saw for the past two-three days was in anticipation of FOMC. But other than that below-88 (a dollar) is the new normal for the rupee," a dealer at a state-owned bank said. The rupee was on an appreciating spree before the FOMC outcome, gaining for four consecutive trading days till Wednesday. 

The dollar index rebounded as Federal Reserve Chair Jerome Powell said the committee did not seriously consider a 50-bps rate cut at its meeting, adding that the central bank does not need to rush easing. The dollar index had slumped to its lowest level since February 2022 after the FOMC on Wednesday voted to reduce the federal funds target rate range by 25 basis points to 4.00-4.25%, and guided for 50 bps of additional cuts this year. However, the dollar index sprang back following Powell's comments as he left investors unsure about the pace of Fed's future moves. 

At 1330 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 96.92, against 97.02 Wednesday and 96.66 Tuesday. The index fell to low of 96.22 on Wednesday, its lowest level since February 2022.

Further, noting the sharp depreciation in the rupee at open, banks bought dollars on behalf of oil marketing companies and other importers on expectation that the Indian currency may fall more, which further weighed on the Indian unit, dealers said.

"Importers are buying (dollars) since morning, they were holding back till today anticipating further appreciation of rupee," a dealer at a state-owned bank said. "But as market had already factored in 25 bps cut and there was no additional information on this front, rupee will be below 88 level."

However, banks also sold dollars on behalf of foreign portfolio investors, looking to invest in Indian markets, which limited losses for the Indian currency, dealers said. A rise in domestic equities also acted as a cushion to the falling rupee, they said. At 1330, both the Nifty 50 and Sensex were up 0.2%.

For the rest of the day, the rupee is seen moving in a range of 87.90-88.30 against the greenback. Dealers peg immediate technical support for the rupee at 88.20 a dollar.  (Rati Chaphekar)

India Rupee: Technical levels for rupee - Sept 18

MUMBAI – At 1100 IST, the rupee was at 88.0575 per dollar. At 0900 IST, the rupee was at 87.9700 a dollar, against its previous close of 87.8150. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Rati Chaphekar)

India Rupee: Sharply down as dollar index rebounds post FOMC outcome

MUMBAI – The rupee was sharply down against the dollar Thursday as the dollar index rebounded from a three-and-a-half year low as investors assessed the policy outcome of the US Federal Open Market Committee, dealers said. A fall in Asian currencies and importers' dollar purchases also weighed on the rupee, dealers said. "Statements post FOMC were hazy, the market clearly expected more rate cuts, so likely one more rate cut this year," a dealer at a private-sector bank said. 

The dollar index strengthened after US Federal Reserve Chair Jerome Powell said the committee did not seriously consider a 50-bps rate cut at its meeting, raising questions about the depth and persistence of rate cuts that the market was pricing in. The FOMC, in a 11-1 vote on Wednesday lowered the Federal funds target range by 25 basis points to 4.00-4.25%. The committee judged the softening labour market and downside risks to employment for its decision.

In the statement of economic projections, the US Federal Reserve officials projected the federal funds target rate to be at 3.50-3.75% by the end of this year. "Uncertainty about the economic outlook remains elevated," the Fed statement said. "The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment have risen." 

At 0944 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.07, a tad up from 97.02 Wednesday and 96.66 Tuesday. The index fell to a low of 96.22 Wednesday, its lowest level since February 2022. 

The rupee was also weighed as a few traders and importers purchased the greenback, dealers said. "Seems like dollar demand is not just from importers, at these levels it looks like dollar buys are prudent and traders are going long," the dealer said. Dealers expect the rupee to remain under pressure during the day as importers are also likely to purchase dollars aggressively, wary of a further depreciation of the Indian currency. 

During the day, the rupee is seen moving in a range of 87.80-88.15 against the dollar. Dealers peg key technical support for the Indian unit at 88.15 against the greenback.  (Gowri Lakshmi)

India Rupee - Asia FX: Most down as dollar index up; market assesses FOMC outcome

MUMBAI – Most Asian currencies fell Thursday against the greenback as the dollar index rebounded from its three-and-a-half year low as traders pulled back from aggressive rate cut bets after the US Federal Open Market Committee's decision Wednesday. The US Federal Reserve lowered the Federal funds rate target by 25 basis points taking the federal funds target rate range to 4.00-4.25%, after keeping it unchanged for five consecutive meetings.

In the statement of economic projections, the Fed officials guided for the federal funds target rate to be at 3.50-3.75% by the end of this year, which is 50 bps lower than the current rate. According to the statement, "The committee is strongly committed to supporting maximum employment and returning inflation to its 2% objective." However, it did acknowledge that "inflation has moved up and remains somewhat elevated."

The dollar index rebounded as Federal Reserve Chair Jerome Powell said the committee did not seriously consider a 50-bps rate cut at its meeting. This raised questions about the depth and persistence of rate cuts that the market was pricing in.

Th dollar index recovered and was broadly steady in early trade Thursday as traders assesed the Fed's rate-cut decision. At 0916 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 97.02, unchanged from Wednesday but up from 96.66 Tuesday. The index fell to low of 96.22 on Wednesday, its lowest level since February 2022. The South Korean won fell 0.5% against the greenback while the Philippine peso and the Malaysian ringgit fell 0.3% and 0.2%, respectively.

The Indonasian rupiah fell 0.2% against the greenback after Bank Indonesia announced a suprise rate cut, its sixth cut since it kicked off an easing cycle in September last year. The Indonesian central bank lowered the rates by 25 bps at its policy meeting Wednesday, taking the benchmark 7-day reverse repurchase rate to 4.75%. Economists surveyed by Reuters had expected the central bank to hold rates after a cut in July and an unexpected easing in August.

The offshore Chinese yuan fell 0.1% against the greenback. The People's Bank of China left a key interest rate unchanged on Thursday. The Taiwan dollar, too, fell 0.1% against the dollar. Bucking the trend, the Thai baht rose 0.2% against the dollar.  (Rati Chaphekar) 

India Rupee: Expected range for rupee - Sept 18

Following are the expected support and resistance levels for the rupee on Thursday, as forecast by leading banks and brokerages in an Informist poll: 

(Pratiksha and Gowri Lakshmi)

End

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

Edited by Saji George Titus

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