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Informist, Wednesday, May 14, 2025

By Gowri Lakshmi 

MUMBAI –  The rupee erased all losses and ended higher against the dollar Wednesday due to a decline in the dollar index in European market hours and dollar sales by exporters, dealers said. However, the gains were capped due to persistent dollar purchases by oil marketing companies, dealers said. 

"There were multiple factors which played out today," a dealer at a public-sector bank said. "The rupee was heavily weighed by importer (dollar) buys in the morning, but later exporters sold significantly, and a few nats (nationalised banks) also likely sold."

After touching a low of 85.5125 against the greenback, the rupee settled at 85.2700 a dollar, higher than the previous close of 85.3300. The rupee moved in a range of over 45 paise during the day. Most Asian currencies also strengthened against the greenback Wednesday due to a weakness in the dollar index. Other Asian currencies rose between 0.1%-1.8%, with the South Korean won being the best-performing currency.

The rupee began the day sharply higher at 85.0600 against the dollar following a decline in the dollar index, dealers said. The dollar index weakened after the US consumer price index for April came in weaker-than-expected, rising by 0.2% on month, down from the estimate of 0.3% in a Reuters poll. The annual inflation rate eased to 2.3% in April from 2.4% a month earlier. 

Noting the sharp rise of the Indian currency, oil marketing companies rushed to purchase the greenback, dealers said. They also increased their dollar purchases due to fears of a further rise in crude oil prices. Oil prices were trading near a two-week high early Wednesday, dealers said. Crude oil prices advanced after the US and China agreed to suspend most of the retaliatory tariffs, which boosted optimism about global demand and growth, dealers said.

The July Brent Crude contract on the Intercontinental Exchange was $65.73 per barrel at 1530 IST, down from the previous close of $66.63 per barrel, but sharply up from $64.96 per barrel Monday. Dealers expect crude oil prices to rise as high as $70 per barrel in the near term.

"We expected the rupee to rise further, but it was mostly capped by importer buys," a dealer at a public-sector bank said. "Moreover, inflows into Indian markets have reduced after US-China trade tensions eased." 

As the rupee fell to 85.40 a dollar, other importers who were wary of a sharp fall of the rupee, also purchased the greenback, dealers said. This further weighed on the Indian currency, dealers said. Continuous dollar demand from oil marketing companies and other importers pushed the rupee to the day's low of 85.5125 a dollar. 

However, as soon as the rupee fell past the key level of 85.5100 a dollar, exporters sold the greenback to take advantage of the relatively higher dollar/rupee levels, dealers. Some dealers also speculated that a few public-sector banks sold dollars, likely on behalf of the Reserve Bank of India, which helped pare some of the losses incurred earlier in the day. 

A further fall in the dollar index during the European trading session also helped the Indian currency erase its losses, dealers said. At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 100.48, down from 100.93 Tuesday and sharply down from 101.78 Monday. The index had risen to a high of 101.02 earlier in the day.

FORWARDS

Dollar/rupee forward premiums ended lower across tenors, with the one-year premium ending near a three-week low Wednesday, due to a rise in the benchmark US Treasury yield, dealers said. A fall in India's CPI inflation also pushed premiums lower, dealers said. Forward premiums of a currency pair are reflective of the interest rate differential between the two countries.

Data released Tuesday showed US CPI for April cooled to 2.3% on year, lower than the 2.4% estimated in a poll by Dow Jones. Despite a fall in US CPI, investors remained cautious of rate cuts in the US, as per market participants. However, with the fall in India's headline CPI inflation to a 69-month low of 3.16% in April, market participants strengthened their hopes of more rate cuts in India, which pushed premiums lower.

Going ahead, forward premiums are expected to remain lower due to the likelihood of rate cuts in India, while there is still uncertainty around the interest rate trajectory in the US, dealers said. At 1530 IST, the one-year exact-period dollar/rupee forward premium settled at 180.65 paise, down from 185.25 paise Tuesday. On an annualised basis, the premium ended at 2.11%, down from Tuesday's 2.17%.

OUTLOOK 

On Thursday, the rupee will take cues from the movement of the dollar index and the offshore Chinese yuan, dealers said. "In the near term, the dollar is expected to appreciate. We will look out for key data points from the US so we have more clarity," a dealer at a state-owned bank said. The US retail sales data, producer price index for April and the weekly initial jobless claims data are due Thursday. 

Dollar purchases by importers will likely weigh on the rupee, dealers said. Movements in the crude oil prices will also be closely tracked and any rise may prompt oil marketing companies to purchase dollars in large quantities, which can push the rupee past 85.50 a dollar, dealers said. However, dealers expect the public-sector banks to step in with dollar sales, likely on behalf of the RBI, to prevent the rupee from inching toward the psychologically crucial level of 86 per dollar. 

During the day, the rupee is seen moving in a range between 84.90 and 85.60 a dollar. Dealers see strong technical support for the rupee at 85.60 a dollar. 

India Rupee - World FX: Dollar index declines after softer than expected CPI

MUMBAI – The dollar index declined on Tuesday after the US consumer price index for April came in weaker than expected. Data published on Tuesday showed the CPI rose only 0.2%, against an estimate of 0.3% rise in a Reuters poll. On an annual basis, the inflation print fell to 2.3% in April from 2.4% a month prior. 

The dollar weakened against most other major global currencies in the European trading session Wednesday. At 1426 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 100.51, down from 100.93 Tuesday and sharply down from 101.78 Monday. The Japanese yen rose 0.7% against the greenback. 

The euro was up 0.4% against the US currency. However, gains in the euro were capped after Germany's inflation eased further to 2.2% last month, data released on Wednesday showed. The pound sterling was up 0.3%, while the Swiss franc and Canadian dollar rose 0.4% and 0.2%, respectively. 

The Australian dollar was up 0.3% after Australia's wage growth came in higher than estimated in Jan-Mar, indicating growth in the labour market supported by a slew of public sector hiring. The Wage Price Index inched up 3.4% annually in the quarter ended March, exceeding analysts' estimate of 3.2%. On quarter, wages grew 0.9%, higher than the 0.8% forecast. Tracking gains of the Australian currency, the New Zealand dollar was up 0.4% against the greenback. Any change in the Australian economy directly impacts the New Zealand currency due to their close bilateral trade relations.  (Gowri Lakshmi)

India Rupee:Fwd premium near 3-week low on rise in US yld, fall in India CPI

MUMBAI – Dollar/rupee forward premiums fell across tenors, with the one-year premium falling to a near three-week low, tracking a rise in the benchmark US Treasury yield, dealers said. A fall in India's CPI inflation also pushed forward premiums lower, dealers said. 

"There are multiple factors (for the fall in forward premiums) – one is the India CPI, then there is higher US yields," a dealer with a state-owned bank said. The 10-year US Treasury yield rose to settle at a near three-month high of 4.49% Tuesday. The 10-year US Treasury yield rose as the US-China agreement to reduce tariffs eased fears of a trade war, boosting investor confidence and increasing risk appetite. 

Data released Tuesday showed US CPI for April cooled to 2.3% on year, lower than the 2.4% estimated in a poll by Dow Jones. Despite a fall in US CPI, investors remained cautious of rate cuts in the US, as per market participants. However, with a fall in India's headline CPI inflation to a 69-month low of 3.16% in April, market participants strengthened their hopes of more rate cuts in India, which pushed forward premiums lower. Forwards of a currency pair are reflective of the interest rate differential between the two countries.

The one-year exact-period dollar/rupee forward premium fell to 2.11% at 1356 IST, the lowest since Apr. 25. On Tuesday, the premium was 2.17%. Going forward, market participants expect premiums to remain lower due to the prospects of more rate cuts in India. However, the fall may be limited, should there be a change in the view towards more rate cuts in the US, market participants said.  (Sourabh Kumar)

India Rupee: Largely steady as exporters' dlr sales offset oil cos' dlr buys

MUMBAI – The rupee was largely steady against the dollar Wednesday as dollar purchases by banks on behalf of oil marketing companies offset the impact of exporters' dollar sales, dealers said. The Indian unit has moved in a range of 45 paise so far in the day. 

Dealers said oil marketing companies persistently bought the greenback, noting a rise in crude oil prices. "The US-China agreement and supply-side optimism are supporting crude prices. In the near term, we can expect crude prices to trade between $66-$70 (per barrel)," a dealer at a private sector bank said. 

Oil prices traded near a two-week high as the trade war between the US and China de-escalated earlier this week. At 1350 IST, the July Brent Crude contract on the Intercontinental Exchange was at $66.32 per barrel, slightly down from $66.63 per barrel Tuesday but sharply higher than $64.96 per barrel Monday. 

Noting a sharp rise in the local unit in early trade, some other importers also bought dollars, which weighed on the rupee, dealers said. The Indian unit touched a high of 85.0600 at the opening, before falling to the day's low of 85.5125.

However, as soon as the rupee fell beyond the key technical support of 85.50 per dollar, some exporters stepped in to sell dollars to take advantage of the relatively higher dollar/rupee levels, dealers said. However, most exporters are in a wait-and-watch mode, expecting the rupee to fall past the 85.60 a dollar level. 

"It is just a range play that is happening for now. Rupee has consolidated in the 84.50-85.50 range and traders are just booking profits wherever they can," a dealer at a private bank said. However, most dealers expect public sector banks to sell dollars, likely on behalf of the Reserve Bank of India, in case the rupee inches closer to the psychologically crucial 86-per-dollar mark. 

A further fall in the dollar index in European trade also supported the Indian unit, dealers said. The dollar index fell sharply on Tuesday after the US inflation print for April rose less than expectations. The US inflation reading rose only 0.2% on month in April, against the expectation of a 0.3% rise in a Reuters poll. 

At 1350 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 100.51, against 100.93 on Tuesday and 101.78 Friday. For the rest of the day, the rupee is seen moving between 85.00 and 85.60 against the dollar. Dealers see strong technical support for the rupee at 85.50 against the greenback.  (Gowri Lakshmi)

India Rupee: Technical levels for rupee - May 14

MUMBAI – At 1059 IST, the rupee was at 85.2900 per dollar. At 0900 IST, the rupee was at 85.0600 a dollar, against the previous close of 85.3300. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Gowri Lakshmi and Pratiksha)

India Rupee: Falls as importers buy dollars; weaker dollar index limits fall

MUMBAI – The rupee erased all early gains and fell against the dollar as importers purchased dollars at lucrative levels, dealers said. The rupee opened sharply higher on improved risk sentiment amid a truce between India and Pakistan and as the US and China suspended tariffs on each other's imported goods, dealers said.

"Only oil marketing companies were active in the morning... other importers have already hedged at these levels yesterday (Tuesday)... they will aggressively purchase at 84.80 (a dollar) and above," the currency trader said. 

Oil marketing companies bought the greenback given the lower dollar/rupee levels, dealers said. This weighed on the rupee. Fears of a further rise in oil prices also prompted oil companies to purchase dollars in larger quantum, dealers said. Oil prices traded at a near two-week high due to optimism around the US-China trade agreement.

At 0940 IST, the July Brent Crude contract on the Intercontinental Exchange was at $66.28 per barrel, slightly down from $66.63 per barrel Tuesday but sharply up from $64.96 per barrel Monday. The Brent crude prices hit a high of $66.81 per barrel Tuesday, the highest level since Apr. 28.

The dollar index weakened on Tuesday after the US CPI for April came softer than expected, rising only 0.2% on month. A Reuters poll of analysts estimated a 0.3% rise in the US CPI. On an annual basis, the inflation rate dropped to 2.3% in April from 2.4% a month prior. At 0936 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 100.91, steady from 100.93 on Tuesday but sharply down from 101.78 Friday. 

During the day, the rupee is seen moving between 84.80 and 85.50 against the dollar. Dealers see strong technical support for the rupee at 85.50 a dollar.  (Gowri Lakshmi)

India Rupee - Asia FX: Mixed; Thai baht down on bleaker GDP growth view

MUMBAI - Asian currencies moved on a mixed note Wednesday as investors assessed the suspension of tariffs by the US and China on each other's goods, announced earlier this week. The Thai baht was the worst performer and fell 0.2%, after Bank of Thailand's Monetary Policy Committee minutes showed that a worsening economic outlook due to US tariffs triggered the interest rate cut decision in April. The rate-setting panel voted 5-2 to lower the one-day repurchase rate by 25 basis points to 1.75%, the lowest level in two years. 

"Most members deemed it appropriate to cut the policy rate at this meeting to be consistent with the worsening economic outlook, address heightened downside risks, and align financial conditions with the evolving economic and inflation outlook," the minutes showed.

The Bank of Thailand is scheduled to meet for its next policy decision on Jun. 25. The central bank expects the nation's economy to grow slower than previously anticipated due to global trade uncertainty. This weighed on the Thai baht. 

The Taiwanese dollar rose 0.4% and the Indonesian rupiah was up 0.3% against the dollar. The South Korean won was up 0.1% against the US currency after South Korea's unemployment rate dropped to 2.7% last month. Data published earlier in day showed the number of employed rose by 194,000 to 28,887,000 last month, logging a 0.7% rise on year.

The Malaysian ringgit was up 0.2% against the greenback. The Philippine peso was down 0.1%, while the Chinese yuan fell 0.2% against the dollar. The dollar index declined Tuesday after weaker-than-expected US CPI data. Data published Tuesday showed the US CPI for April rose only 0.2% on month, lower than the analysts' estimate of a 0.3% rise. The annual inflation rate fell to 2.3% from 2.4% in April. At 0904 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 100.92, little changed from 100.93 Tuesday but sharply down from 101.78 Friday.  (Gowri Lakshmi)

India Rupee: Expected range for rupee - May 14

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

(Gowri Lakshmi and Sourabh Kumar)

End

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

Edited by Saji George Titus

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