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Informist, Friday, May. 2, 2025

 

By Gowri Lakshmi

 

MUMBAI – After rising to a seven-month high, the rupee erased all its gains and ended lower against the greenback Friday on persistent dollar purchases, likely by the Reserve Bank of India and importers, dealers said. Exporters' dollar sales along with the unwinding of long dollar bets by traders supported the rupee in early trade, dealers said. 

 

"The kind of movement the rupee has been showing (Friday) is mindblowing," a currency trader at a private-sector bank said. "At this point nobody is able to predict what level the rupee will rise to and when it will fall back to previous levels. Today's (Friday's) appreciation was unforeseen and since these were great levels (dollar/rupee) importers actively bought them (dollars) at every level." 

 

After moving in a range of over 82 paise, the rupee settled at 84.5800 a dollar, down from its previous close of 84.4875. The Indian unit fell 0.1% against the US currency. The rupee breached the psychologically crucial level of 84 per dollar and touched a high of 83.7550 during the day. 

 

A rise in other Asian currencies supported the rupee, according to some dealers. Other Asian currencies rose between 0.5% and 1.2% against the greenback, with the Thai baht being the best performer followed by the Malaysian ringgit.

 

The rupee started the day sharply higher against the US unit at 84.0900 a dollar owing to foreign fund inflows, dealers said. In April, overseas investors bought shares worth $1.2 billion. On Friday, the benchmark indices, the Nifty 50 and the BSE Sensex, ended 0.5% and 0.3% higher, respectively. A few dealers speculated that some foreign fund inflows were ahead of the MSCI rejig, which is scheduled on May. 13.

 

The rupee was supported as investors' risk-off sentiment was also lifted after reports said India's trade negotions with the US was progressing on a positive note. US President Donald Trump Thursday said trade talks between India, South Korea and Japan were in progress and also hinted toward an openness to initiate a de-escalation of the trade standoff with China. Last week, US officials said "India would be one of the first countries to strike a trade deal" after the aggressive reciprocal tariffs were imposed. 

 

Shortly after the market opened, several stop losses were hit after traders trimmed their long dollar bets, dealers said. Multiple stop-losses were triggered after the rupee breached the key level of 84-per-dollar. The rupee rose over 25 paise within the first hour of trading. "A weakness of the dollar is ongoing. With rupee appreciating solely on flows, it is difficult for traders to hold on at these levels," a dealer at a private sector bank said. 

 

A few exporters also sold greenback as soon as the rupee rose above the key level, aniticipating a further rise of the rupee. This provided a further cushion for the rupee, dealers said. "Exporters at this point are simply clue-less," a trader at a state-owned oil marketing company said. A lot of them had huge exposures so some are actively hedging... while some are in wait-and-watch mode." Exporters likely sold aggressively around 84.00 a dollar in early trade.

 

 

Noting the sharp fall, oil marketing companies and other importers rushed to purchase the greenback, which capped the rupee's rise, dealers said. "They did cover their (importers) profits at earlier levels, but these levels are were impossible to not hedge," a currency trader at a brokerage firm said. 

 

State-owned banks also purchased dollars, likely for the RBI, at around 84.00 a dollar levels in early trade, to prevent the rupee from rising sharply but could not limit the rupee's rise as stop-losses on long dollar bets were triggered. The apex bank remained absent from intervening in the market for most part of the trading hours, dealers said. However, public sector banks 'aggressively' purchased dollars a few minutes before the markets closed, pulling the rupee to the day's low of 84.5800 dollar, dealers said. 

 

"I think the RBI is deliberately staying away from intervening in the market," said the trader at the state-owned oil marketing company. "It looks like India wants to show it is not manipulating the currency (dollar/rupee exchange rate) since trade talks are ongoing. May be once a deal is struck, they (RBI) will be more active again." 

 

The dollar index remained steady Friday. At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies was at 99.74, slightly up from 99.64 Wednesday and 99.19 Tuesday.

 

	AT 1530IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	84.5800	84.0900	83.7525	84.5800	84.4875
1-year dlr/rupee fwd (paise)	192.40	192.90	192.90	187.30	194.21

 

FORWARDS

The dollar/rupee forward premium ended lower across tenors Friday. 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 settled at 2.28%, down from 2.30% Wednesday and 2.27% Tuesday. On an absolute basis, the premium was 192.40 paise, down from 194.21 Wednesday, and down from 192.97 Tuesday.

 

OUTLOOK

Markets are shut on Saturday. On Monday, the rupee will track movements in the Chinese yuan and the dollar index. Market participants keenly await the US non-farm payrolls data due later in the day, to get more cues on the US Federal Reserve's rate-outlook. Traders will also watch out for any new developments in the geopolitical front and any news related to tariffs and US trade deals with its major trading partners. 

 

Dealers expect importers to continue purchasing dollars, which may weigh on the rupee, dealers said. They also expect foreign fund inflows to continue supporting the rupee. During the day, the rupee is seen moving in a range of 84.20 and 84.70 a dollar. Dealers peg immediate support for the rupee at 84.75 a dollar. 

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India Rupee - World FX: Euro up after data shows stable factory output

 

	AT 1406 IST	HIGH	LOW	PREVIOUS
GBP/USD	1.3286	1.3322	1.3274	1.3275
EUR/USD	1.1330	1.1338	1.1275	1.1285
NZD/USD	0.5922	0.5941	0.5904	0.5902
AUD/USD	0.6420	0.6423	0.6381	0.6382
USD/JPY	145.0700	145.9230	145.0450	145.3210
USD/CAD	1.3825	1.3856	1.3804	1.3854
EUR/JPY	164.3770	164.6220	164.0880	163.9300
CHF/USD	1.2096	1.2104	1.2021	1.2029
EUR/CHF	0.9365	0.9383	0.9362	0.9371

 

MUMBAI - The euro was up 0.3% against the dollar Friday after data showed the bloc's manufacturing Purchasing Managers' index rose to 49.0 in April, from 48.6 a month prior. The data showed manufacturing output in Eurozone grew at the fastest pace in over three years despite PMI reading remaining in the contraction territory. A PMI reading below 50 indicates a contraction of the sector. Further, PMI data from Germany, the bloc's largest economy, showed manufacturing activity rose marginally to 48.4 last month from 48.3 in March, posting the slowest rate of contraction in over two years.

 

The Australian dollar was up 0.5% on improved risk-off sentiment after US hinted openness to initiate trade talks with China. Any change in the Chinese economy directly impacts the Australian currency due to their close bilateral trade relations. However, gains of the Australian dollar were capped after data released earlier showed only moderate rise in the country's retail sales. Australian retail sales marginally rose 0.3% on month in March, after a 0.2% rise in February, indicating consumer spending made little impact to the economic growth in the quarter ended March. Analysts' forecasted a 0.4% increase in a Reuters poll.

 

Tracking gains in the Australian currency, the New Zealand dollar was up 0.3% against the greenback. The dollar index advanced and rose above the key level of 100 Thursday for the first time since Apr. 16. The index rose after reports said Washington had approached Beijing seeking bilateral talks over the aggressive 145% tariffs. "The US has proactively reached out to China through multiple channels, hoping to hold discussions on the tariff issue," a social media account affiliated to a state-owned Chinese media posted. 

 

"I am confident that the Chinese will want to reach a deal. And as I said, this is going to be a multi-step process," US Treasury Secretary Scott Bessent said. "First, we need to de-escalate, and then over time, we will start focusing on a larger trade deal." However, a recent series of weak economic data points from the US limited the gains of the US currency as it indicated a slowing economy and weakening labor market in the world's largest economy.

 

The US initial jobless claims data for the week ended Apr. 26, published Thursday, showed that the number of Americans filing the unemployment benefits rose sharply by 18,000 to 241,000. Separate data showed the manufacturing PMI in April declined to 48.7, the lowest level in five-months, from 49.0 in March. The US GDP, published on Wednesday, also showed the US economy contracted by 0.3% due to a surge in imports before the tariffs were announced. 

 

At 1429 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.89, up from 99.34 Wednesday but down from 99.19 Tuesday. Market participants await the US non-farms payrolls due later in the day to lend more cues into the US Federal Reserve's rate-outlook.

 

The pound sterling rose 0.1% against the greenback. The UK fatory exports declined at sharpest pace in nearly five years amid ongoing tariff worries with the US. The headline S&P Global manufacturing PMI stood at 45.4 last month, below the contraction territory of 50.0 for the seventh month in a row. Manufacturing output fell for the sixth consecutive month. 

 

The Canadian dollar was up 0.2% against the US unit as the commodity-linked currency was impacted by a rise in crude oil prices. Crude prices inched up Friday after China signalled its willingness for talks with the US, raising hopes of a de-escalation on the trade standoff between the two super powers. 

 

The Japanese yen rose 0.2% against the greenback after data published earlier in the day showed a fall in the country's unemployment rate. Japan's average annual jobless rate fell 0.1% to 2.5%, marking the first signs of improvement of the labor market in two years despite a labor shortage. 

 

Meanwhile, a former Bank of Japan official Akira Otani said Friday the country's rate-hike cycle is currently facing the biggest challenge since Kazuo Ueda took charge two years ago. The ongoing tariff uncertainties is rapidly limting the central bank's ability to further raise the benchmark lending rates. "The worst scenario for the BOJ is to end up further delaying achievement of 2% inflation by proceeding with rate hikes amid high uncertainty," said Akira Otani.

 

The Bank of Japan held rates steady at 0.5%, in line with market expectations, and sharply lowered its growth forecatsts, suggesting uncertainty around US tariffs and its impact on the export-heavy economy. "We'll enter a period in which both inflation and wage growth will likely slow somewhat. But we expect a positive cycle of rising wages and inflation to continue due to a severe labour shortage," Ueda said at the press conference Thursday. The Bank of Japan cut its economic growth forecast financial year 2025-26 to 0.5% from 1.1% projected three months ago. 

 

The Swiss franc was up 0.4% against the US dollar due to safe-haven inflows. Switzerland's manufacturing PMI slipped to 45.8 in April from 48.9 in March. The manufacturing PMI was lower than the market consenseus of 48.6 and posted a decline in PMI for the ninth-consecutive month.  (Gowri Lakshmi)

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India Rupee: Off highs on importers' dlr buys; exporters' dlr sales support

 

	AT 1142 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	83.8825	84.0900	83.7525	84.1100	84.4875

 

 

MUMBAI – The rupee was off the day's highs as importers rushed to purchase dollars to take advantage of the relatively lower dollar/rupee levels, dealers said. However, dollar sales by exporters and a weak dollar index supported the rupee, dealers said. The Indian unit was also supported as traders trimmed their long dollar positions, dealers said. Multiple stop-losses were triggered on long dollar bets in early trade.

 

"The rupee has breached all key technical levels. At this point it is even difficult to say where the rupee is headed," a currency trader at a state-owned bank said. "What we saw (earlier in the day) was pure panic, rupee rose on flows, multiple stop-losses were triggered and then traders and exporters sold dollars."

 

The rupee rose after foreign portfolio investors, who were looking to invest in the domestic stock market, sold dollars ahead of the MSCI rejig scheduled for May 13. A positive turn toward an India-US trade deal and de-escalation of trade tensions between the US and China also supported the rupee, dealers said. US President Donald Trump Thursday said trade deals with major trading partners of the US, including India, South Korea and Japan were progressing. He signalled a potential trade talks with China as well. Following this, investor sentiment improved, dealers sad. 

 

A few exporters also sold dollars, anticipating further rise of the rupee, dealers said. This pushed the rupee to hit a high of 83.7550 a dollar. "Exporters panicked and sold at every level, as they were not expecting this big a rise (of the rupee)," the currency trader at the state-owned bank said. 

 

For the rest of the day, the rupee is seen moving between 83.70 and 84 against the dollar. Dealers see strong technical resistance at 83.70 a dollar.  (Gowri Lakshmi)

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India Rupee: Technical levels for rupee - May 2

 

MUMBAI – At 1118 IST, the rupee was at 83.9325 per dollar. At 0900 IST, the rupee was at 84.0900 a dollar, against the previous close of 84.4875. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

 

Participants	S2	S1	R1	R2
State-owned bank	84.75	84.50	83.75	83.50
Private-sector bank	84.25	84.00	83.70	83.50
Brokerage firm	84.65	84.50	83.70	83.22
Brokerage firm	84.25	84.00	83.75	83.50

(Gowri Lakshmi)

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India Rupee - Asia FX: Most up; US hints at starting tariff talks with China

 

MUMBAI – Most Asian currencies traded higher against the dollar Friday as investor sentiment improved after a Chinese state-run media, Yuyuan Tantian, posted on Weibo social media that "The US has proactively reached out to China through multiple channels, hoping to hold discussions on the tariff issue."  

 

"I am confident that the Chinese will want to reach a deal. And as I said, this is going to be a multi-step process", US Treasury Secretary Scott Bessent said. "First, we need to de-escalate, and then over time, we will start focusing on a larger trade deal." Investors' risk-off mood was also lifted after President Donald Trump said that the US was getting close to a trade agreement with India, South Korea, Japan as well as a potential deal with China.

 

Following this, the US dollar advanced against most major global currencies and rose above the key level of 100 Thursday for the first time since Apr. 16. At 0843 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 100.13 against 100.17 Thursday and 99.64 Friday. 

 

However, the dollar was weighed down by a slew of weak economic data from the US which signalled a weakening labour market and contraction in the economy and factory output. The US initial jobless claims data for the week ended Apr. 26, showed that the number of Americans filing for the unemployment benefits jumped by 18,000 to 241,000. Further, the Institute for Supply Management's Manufacturing Purchasing Managers' Index dropped to a five-month low of 48.7 last month from 49.0 a month prior. A PMI reading below 50 indicates contraction in the sector. 

 

On Wednesday, data showed the US economy contracted 0.3% in the first three months of the year, hit by a spike in imports ahead of Trump's tariff implementations. Data showed imports jumped 41.3% in Jan-Mar, before the tariffs were announced. Market participants now await the US non-farm payrolls data, due later in the day, to get cues into the US Federal Reserve's rate-outlook. 

 

Financial markets in China are shut for a long weekend and will resume only on Tuesday. The Philippine peso was up 0.3% against the US currency. The Malaysian ringgit was up 0.1% against the greenback. Malaysia's factory conditions declined further last month as firms scaled back production due to dampened demand. The seasonally adjusted manufacturing PMI slipped to 48.6 in April from 48.8 in March.

 

The Taiwan dollar was the best-performing currency in early trade, strengthening 1.5% against the dollar, tracking gains in the domestic stock market. At 0906 IST, the Taiwan Stock Exchange Capitalization Weighted Stock Index was up 2.2%. Further, data Thursday showed Taiwan's GDP rose by 5.4% on year in Jan-Mar, up from 2.9% rise in the December quarter. 

 

The Indonesian rupiah was up 0.2% against the greenback after better-than-expected inflation in April. Indonesia's annual inflation rate was 1.9% in April, within the central bank's target range of 1.5%-3.5% and slightly higher than the analysts' forecast of 1.6% in a Reuters poll. Core inflation figures will be published later in the day. 

 

The South Korean won was up 0.3% against the greenback after data showed the country's consumer prices rose at a steady pace last month, giving the Bank of Korea room to resume its monetary policy easing cycle. Inflation stood at 2.1% from a year ago, higher than the analysts' estimate of 2% in a Bloomberg poll. Core prices, excluding food and energy, also rose 2.1%. 

 

The Thai baht was up 0.2% against the greenback. Bank of Thailand lowered its benchmark lending rates by 25 basis points, for the second consecutive time and in line with market expectations. The Bank of Thailand's Monetary Policy Committee voted 5-2 to lower the one-day repurchase rate to 1.75%, the lowest level in two years. The Thai economy is forecast to expand at a slower pace than earlier expected with more downside risk due to trade and tariff uncertainties, the central bank said in a statement released after the MPC meeting. 

 

"It's quite clear that the storm is coming from the trade war," Bank of Thailand governor Sethaput Suthiwartnarueput said. "The need to focus on stability is high."  (Gowri Lakshmi)

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India Rupee: Surges past 84/$ on FX flows; stop-losses hit on long dlr bets

 

	AT 0934 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	83.9275	84.0900	83.8100	84.1100	84.4875

 

MUMBAI – The rupee surged against the dollar Friday due to dollar sales by banks for foreign fund inflows, especially into the domestic stock market, dealers said. Multiple stop-losses were triggered on long dollar bets, pushing the rupee to a seven-month high of 83.8150 a dollar within a few minutes after the market opened. 

 

"The rupee has strengthened so strongly, it must be driven sharply by FPI (foreign portfolio investors) inflows only," a dealer at a private sector bank said. At 0928 IST, the benchmark stock indices, the Nifty 50 and the BSE Sensex were up 0.6% and 0.7% respectively. In April, overseas investors bought shares worth $1.2 billion. Some dealers also speculated that the foreign fund inflows were likely to have come ahead of the MSCI rejig scheduled for May 13, with changes effective Jun. 3. 

 

The rupee was supported by improved risk sentiment among investors as the US signalled openness to initiate trade talks with China, hinting de-escalation in the trade standoff between the two super powers. US President Donald Trump also said major trading partners of the US, including India, South Korea, and Japan were likely to see a "trade agreement" soon. Trump also sounded sanguine about bilateral talks with China. 

 

At 0936 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.97, steady from 99.67 Wednesday and 99.17 Tuesday.

 

However, the rupee's gains were capped as importers rushed to purchase the greenback to take advantage of the relatively lower dollar/rupee levels, dealers said. Some oil marketing companies also bought dollars to take advantage of the fall in crude oil prices. In early trade, the June Brent Crude contract on the Intercontintel Exchange fell to as low as $61.77 per barrel from $63.12 per barrel Wednesday and $64.25 per barrel Tuesday. 

 

During the day, the rupee is seen moving between 83.80 and 84.25 against the dollar. Dealers see strong technical resistance at 83.75 a dollar.  (Gowri Lakshmi)

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India Rupee: Expected range for rupee - May 2

 

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:

 

PARTICIPANT	SUPPORT	RESISTANCE
State-owned bank	84.50	84.00
Private sector bank	84.80	84.20
Foreign bank	85.35	84.80
Brokerage firm	85.60	84.90

 

 

 

 

 

 

 

(Gowri Lakshmi and Sourabh Kumar)

 

End

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

 

Edited by Akul Nishant Akhoury

 

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