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Informist, Tuesday, Oct. 28, 2025

By Rati Chaphekar

MUMBAI – The rupee erased all early losses and ended steady against the dollar Tuesday as some state-owned banks persistently sold dollars, likely on behalf of the Reserve Bank of India, dealers said. Banks bought dollars for importers earlier in the day, which weighed on the Indian unit, they said.

"The market was pretty steady after the initial jerk," a dealer at a state-owned bank said. "The nationalised banks sold (dollars for RBI) at various levels. But overall buying pressure (for dollars) was lower than expected." 

After hitting a low of 88.4175 a dollar earlier in the day, the rupee settled at 88.2650 Tuesday, broadly steady from the previous close of 88.2450. The local unit traded in a range of 20 paise during the day.  

The rupee started the day lower against the greenback and fell further shortly after, as banks rushed to buy dollars on behalf of importers, who feared a sharp depreciation of the Indian unit after the steep fall Monday. On Monday, the rupee unexpectedly slumped 0.5% against the greenback, dragged down by persistent dollar buying by some foreign banks for foreign portfolio investors, who were looking to withdraw funds from domestic equities. The domestic currency fell to a low of 88.4175 a dollar, its lowest level in two weeks, during the day. 

However, the rupee soon erased most of its losses as public sector banks stepped in to sell dollars, likely on behalf of the RBI, dealers said. The central bank likely sold dollars around 88.40 a dollar level to prevent a sharp depreciation in the Indian unit, according to dealers. 

"Yesterday's (Monday's) movement was unusual, it will not happen every day. Any sharp movements (in rupee) are usually balanced by selling (of dollars) by nationalised banks to limit volatility," a dealer at a private-sector bank said. According to some dealers, the central bank sold around $500 million-$700 million in the market Tuesday through state-owned banks. 

Meanwhile, the dollar index edged lower ahead of the outcome of the US Federal Open Market Committee's meeting Wednesday, when the rate-setting panel is expected to cut rates by 25 basis points. This provided some support to the Indian unit, dealers said. Fed funds futures traders are now pricing in a 97.8% chance of the Fed cutting interest rates by 25 bps Wednesday, CME FedWatch tool showed. At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.69, down from 98.80 Monday and 98.94 Friday.

While markets have fully priced in a 25-bps rate cut at the Federal Reserve's October meeting, traders will keenly watch out for commentary by Fed Chair Jerome Powell after the meeting for any cues on the future rate cut trajectory of the central bank. The prolonged US government shutdown, which has now entered its fifth week and is showing no signs of easing, has halted the release of key economic data, keeping the market deprived of any cues for the Fed's future rate actions.

Noting the RBI's active intervention to support the rupee, some exporters also stepped in to sell dollars, which supported the local unit, dealers said. However, most exporters still remained on the sidelines as they expect the rupee to fall further in the coming days, they said. "The rupee has seen almost 89 (a dollar) levels in the past. So, exporters, as usual will wait it out," a dealer at a state-owned bank said. 

The Indian currency was also weighed down by a fall in domestic equities, as per dealers. On Monday, the Nifty 50 closed 0.1% lower and the BSE Sensex ended 0.2% down. 

FORWARDS

Dollar-rupee forward premiums ended lower across tenures Tuesday as the RBI likely sold dollars for long-tenure forward delivery to neutralise its spot interventions and avert pushing out rupee liquidity, dealers said. The RBI likely sold forward dollars for maturity in January 2027, they said.

Considering spot dollar sales push out rupee liquidity from the banking system, the RBI conducts buy-sell swaps to replenish liquidity. A buy-sell swap entails buying dollars for immediate delivery and entering into a contract to sell these at a future date, thereby postponing the drain on systemic liquidity. 

The central bank's net injection into the banking system – a proxy for systemic liquidity deficit – was at INR 208.62 billion Monday, against a net absorption of INR 275.48 billion Sunday, as per the RBI's latest data.

Meanwhile, an overnight fall in US Treasury yields limited losses for the forward premiums, dealers said. US Treasury yields fell ahead of the outcome of the US Federal Open Market Committee's meeting on Wednesday, when it is expected to ease rates by 25 bps. Forwards of a currency pair are reflective of the interest rate differential between the two countries.

At 1530 IST, the one-year exact period dollar/rupee forward premium was 2.25%, against the previous close of 2.28%. On an absolute basis, the premium was 199.00 paise, against 201.18 paise Monday. 

OUTLOOK

On Wednesday, the rupee will take cues from movement in the dollar index ahead of the US Federal Open Market Committee's decision, dealers said. The local unit may also track movement of other Asian currencies, they said.

"Another 25 bps cut by Fed is already factored in by the market," a dealer at a state-owned bank said. "Any cues on US-China trade deal after Trump-Jinping meet will be something to look forward to." US President Trump will meet Chinese President Xi Jinping in South Korea Thursday. Traders will also closely watch out for any developments related to the India-US trade deal. 

Dealers also expect importers to continue buying dollars, wary of further depreciation of the rupee, which would exert pressure on the local unit. Further, the Indian unit may also come under downward pressure owing to expiry of the RBI's non-deliverable forwards contracts, they said. 

The rupee is expected to move in a range of 88.00 to 88.50 against the dollar Wednesday. Immediate technical support for the rupee is pegged at 88.50 per dollar, they said.

India Rupee - World FX: Yen surges after US Treasury Secy Bessent's comments

NEW DELHI – The yen surged 0.6% against the dollar after US Treasury Secretary Scott Bessent called for "sound monetary policy" during a meeting with Japanese counterpart Satsuki Katayama, his department said on Tuesday. The comment was seen as Washington's latest hit at the slow pace of interest rate hikes by the Bank of Japan.

The remarks come ahead of the Bank of Japan's policy meeting outcome on Thursday, where the central bank is widely expected to hold interest rates. Market participants will focus on whether the central bank provides clues on the timing of the next hike. Meanwhile, Japan's new Economic Revitalisation Minister Minoru Kiuchi said on Tuesday that a weak yen has benefits for the economy and its demerits could be addressed by swiftly compiling a package of measures to ease the pain from rising living costs. 

The dollar index fell ahead of the outcome of the US Federal Open Market Committee's meeting Wednesday, where the rate-setting panel is expected to cut rates by 25 basis points. Fed funds futures traders are now pricing in a 97.8% chance of the Fed cutting interest rates by 25 bps Wednesday, CME FedWatch showed. At 1440 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.70, down from 98.80 Monday and 98.94 Friday.

The euro was steady ahead of the European Central Bank's policy meeting decision on Thursday, where it is expected to keep rates steady for the third consecutive meeting. Traders will watch out for cues on whether the central bank will resume easing next year.

The Australian dollar was down 0.1% ahead of US President Trump's meeting with Chinese President Xi Jinping in South Korea Thursday. However, optimism over a possible US-China trade deal supported the Australian currency. Trump said on Monday that the US and China were set to "come away" with a trade deal. Any development in China's economy affects Australia due to both the countries' strong bilateral trade ties. The New Zealand dollar was steady against the greenback, while the pound sterling was down 0.2%. (Pratiksha)  

India Rupee: Off lows as RBI likely sells dollars; importers' dlr buys weigh

NEW DELHI – The rupee came off its day's low against the dollar as state-owned banks sold dollars, likely on behalf of the Reserve Bank of India, dealers said. The Indian unit had fallen to 88.4175 a dollar earlier in the day, its lowest level in two weeks.

The central bank likely sold dollars around 88.40 a dollar to prevent a sharp depreciation in the Indian unit, according to dealers. "RBI is trying to minimise the fall (in rupee)," a dealer at a private sector bank said. "There is good demand (for dollars) in the market but 88.50 (a dollar) seems capped for now."

The Indian unit was weighed down by dollar purchases on behalf of importers, who fear further depreciation in the rupee, dealers said. The rupee fell 0.5% against the dollar Monday.

A fall in domestic equities also exerted pressure on the local currency, dealers said. At 1245 IST, the Sensex and Nifty 50 were down 0.4% and 0.3%, respectively. 

Meanwhile, the dollar index edged lower ahead of the outcome of the US Federal Open Market Committee's meeting Wednesday, where the rate-setting panel is expected to cut rates by 25 basis points. This provided support to the Indian unit, dealers said.

Fed funds futures traders are now pricing in a 97.8% chance of the Fed cutting interest rates by 25 bps Wednesday, CME FedWatch showed. At 1245 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.68, down from 98.80 Monday and 98.94 Friday.

For the rest of the day, the rupee is seen moving in a range of 88.10 and 88.50 against the greenback. Dealers peg immediate technical support for the rupee at 88.50. (Pratiksha)

India Rupee: Premiums down as RBI likely sells long-tenure forward dollars

NEW DELHI – Dollar-rupee forward premiums fell across tenures Tuesday as the Reserve Bank of India likely sold dollars for long-tenure forward delivery to neutralise its spot interventions and avert pushing out rupee liquidity, dealers said. The RBI likely sold forward dollars for maturity in January 2027, they said.

On Tuesday, the central bank sold dollars in the spot market as well, to prevent the rupee from a sharp depreciation, dealers said. Considering spot dollar sales push out rupee liquidity from the banking system, the RBI conducts buy-sell swaps to replenish liquidity. A buy-sell swap entails buying dollars for immediate delivery and entering into a contract to sell these at a future date, thereby postponing the drain on systemic liquidity. 

"RBI has been targetting the far-end forwards. They probably don't want to create liquidity issues in the near-term," a dealer at a state-owned bank said. The central bank's net injection into the banking system – a proxy for systemic liquidity deficit – was at INR 208.62 billion Monday, against a net absorption of INR 275.48 billion Sunday, as per the RBI's latest data.

Meanwhile, an overnight fall in US Treasury yields limited losses for the forward premiums, dealers said. US Treasury yields fell ahead of the outcome of the US Federal Open Market Committee's meeting on Wednesday, where it is expected to ease rates by 25 basis points. Forwards of a currency pair are reflective of the interest rate differential between the two countries.

At 1300 IST, the one-year exact period dollar/rupee forward premium was 2.26%, against the previous close of 2.28%. On an absolute basis, the premium was 199.50 paise, against 201.18 paise Monday. (Pratiksha)

India Rupee: Technical levels for rupee - Oct 28

MUMBAI – At 1130 IST, the rupee was at 88.2975 per dollar. At 0900 IST, the rupee was at 88.3200 a dollar, steady against the previous close of 88.2450 a dollar. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Rati Chaphekar)

India Rupee: Falls as banks buy dollars for oil companies, importers

MUMBAI – The rupee fell against the dollar Tuesday as banks rushed in to buy dollars on behalf of importers, wary of a further depreciation in the Indian currency after its sharp fall on Monday, dealers said.

The rupee fell 0.5% against the dollar Monday. However, some dealers speculated that some public sector banks sold dollars, likely on behalf of the Reserve Bank of India, which limited the fall of the rupee.

"It was sort of panic buying (of dollars) after yesterday's (Monday) fall (in rupee)," a dealer at a state-owned bank said. "I don't think this buying pressure will last for long, since this was just a reaction to yesterday's movement."

Meanwhile, the dollar index eased in early trade ahead of the outcome of the US Federal Open Market Committee's meeting, due on Wednesday, which lmited losses for the Indian unit. Traders are likely to watch out for commentary by Fed Chair Jerome Powell after the meeting for any cues on the future rate cut trajectory of the central bank. 

Fed funds futures traders are now pricing in a 97.8% chance of the Fed cutting interest rates by 25 bps Wednesday, CME FedWatch showed. At 0945 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.65, down from 98.80 Monday and 98.94 Friday.

For the rest of the day, the rupee is seen moving in a range of 88.00 and 88.50 against the greenback. Dealers peg immediate technical support for the rupee at 88.50. (Rati Chaphekar)

India Rupee - Asia FX: Mixed ahead of FOMC meeting outcome; yuan rises 0.1%

MUMBAI – Asian currencies traded on a mixed note Tuesday as market participants await the outcome of the US Federal Open Market Committee's meeting, due Wednesday. Though the markets have fully priced in a 25-basis-point rate cut at the Fed's October meeting, traders will watch out for commentary from Fed Chair Jerome Powell to gauge the future rate cut trajectory of the Fed. 

Fed funds futures traders are now pricing in a 97.8% chance of the Fed cutting interest rates by 25 bps Wednesday, CME FedWatch showed. At 0925 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 98.71, down from 98.80 Monday and 98.94 Friday. Tracking the fall in the dollar index, the Philippine peso rose 0.4% against the greenback.

The Chinese yuan was up 0.1% against the greenback ahead of US President Donald Trump's meeting with China's President Xi Jinping later this week, amid hope of a trade deal between the world's two largest economies. "I've got a lot of respect for President Xi and I think we're going to come away with a deal," Trump told reporters on Air Force One before landing in Tokyo Monday for his Asia tour.

The Taiwan dollar rose 0.4% against the dollar after the country's Foreign Minister Lin Chia-lung Tuesday said he was not worried that Trump would "abandon" the island at his upcoming meeting this week with Jinping. "No matter whether on security, trade and business and other areas, there is close cooperation," Lin said while talking about relations between US and Taiwan.

The South Korean won fell 0.2% against the greenback even after data Tuesday showed that in the Jul-Sept quarter, South Korea's economy grew at the fastest pace in a year and a half, helped by strong exports and solid private consumption as government stimulus boosted spending. GDP expanded 1.2% in the third quarter from the trailing quarter, faster than the 0.9% expected in a Reuters poll and the 0.7% growth the previous quarter, preliminary figures showed.

The Malaysian ringgit and Thai baht fell 0.2% and 0.1% against the dollar, respectively. The Indonesian rupiah traded steady against the greenback.  (Rati Chaphekar)

India Rupee: Expected range for rupee - Oct 28

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: 

(Rati Chaphekar)

End

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

Edited by Tanima Banerjee

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