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Informist, Friday, Jun. 5, 2026

 

By Divya Moolayattil

 

MUMBAI – The rupee jumped against the dollar, posting its biggest gain in a day in more than two months, as the banks unwound their long dollar positions after the Reserve Bank of India announced a slew of measures to attract inflows. "These measures are definitely a big boost for the rupee, and many were unwinding positions. Few inflows were also seen," a dealer at a private sector bank said.

 

The Indian currency snapped its three-day losing streak and settled at a four-week high of 94.9450 a dollar Friday, 0.9% higher from its previous close. This was the biggest single-day gain for the rupee since Apr. 2, when RBI measures helped it recover sharply. Most Asian currencies gained 0.1-0.2% against the dollar, with the Chinese yuan gaining the most, after the Indian rupee.

 

On Friday, the RBI announced a facility for concessional forex swaps until Sept. 30 to incentivise external commercial borrowings by public sector companies. It also introduced a similar facility by bearing the full hedging costs for banks when raising fresh 3–5-year foreign-currency non-resident deposits till Sept. 30. In a separate move, the government also exempted foreign institutional investors from paying capital gains tax on investments in government bonds.  

 

The government also exempted FIIs from paying any withholding tax on interest on such investments. The government also expanded the list of specified securities under the Fully Accessible Route to include new issuances of government securities in tenors of 15, 30 and 40 years, as well as sovereign green bonds in the tenors of Fully Accessible Route-eligible securities. Short-term investment limit, concentration limit, and security-wise limit for investments by foreign portfolio investors in government securities have also been removed for investments under the general route. The rupee rose to a high of 94.8900 per dollar after these measures were announced. 

 

Dealers said the RBI measures are expected to bring in inflows of about $20 billion. "Some money that went out of the market will come in, but not in the near term, supporting the rupee," a dealer at a brokerage firm said. However, rising tensions in West Asia will limit the rupee's sharp appreciation, they said. "The rupee is a structurally depreciating currency. We may see changes in the rupee, subject to the US-Iran war and crude movements. The psychological impact of the measures was there, but from Monday, the rupee will follow crude prices," the dealer said. 

 

Some dealers speculated that the RBI sold dollars through state-owned banks at various levels to further support the rupee. "The RBI is trying very hard to push the rupee up. The RBI's selling can be expected further also," a dealer at a foreign sector bank said.

  

Crude oil price fell slightly despite rising tensions in West Asia. Israel and Lebanon continued strikes just hours after they agreed to a ceasefire. Hezbollah rejected the truce after Israel attacked the country's southern region Thursday. At 1530 IST, Brent crude oil prices for August delivery fell to $94.90 a barrel from $95.03 Thursday. The dollar index also fell, boosting the rupee. At 1530 IST, the dollar index was at 99.22, down from 99.43 Thursday.  

 

	AT 1530 IST	AT 0900 IST	HIGH	LOW	PREVIOUS (AT 1530 IST)
Spot rupee per $1	94.9450	95.7125	94.8950	95.7750	95.7850
1-year dlr/rupee fwd (paise)	266.29	285.00	289.21	263.57	285.46

 

 

FORWARDS

Dollar-rupee forward premium fell sharply across all tenures as banks continued to sell dollars for forward delivery to unwind long dollar positions, dealers said. One-year dollar premium forwards fell to a three-month low of 2.77% or 263.57 paise after the rupee fell to a low of 94.8950 a dollar in the spot market Friday. 

 

Meanwhile, some dealers speculate the Reserve Bank of India sold dollars for long-term forward delivery to neutralise its spot interventions, dealers said. 

 

At 1530 IST, the one-year exact-period dollar-rupee forward premium was 2.80%, against Friday's close of 2.98%. On an absolute basis, the premium was 266.29 paise, against Thursday's close of 285.46 paise. 

 

OUTLOOK 

On Monday, the rupee will take cues from movement in crude oil prices amid evolving developments in West Asia, dealers said. The dealers expect the positive sentiment to remain in the market due to new measures announced by the RBI and government to attract inflows. "The policy is mildly supportive for the rupee, with the focus now shifting back to crude oil prices, FII flows, and upcoming US non-farm payrolls data," Jateen Trivedi, vice president, research analyst - commodity and currency, LKP Securities, said.

 

Dealers expect importers to continue buying dollars, fearing further rupee depreciation amid uncertainty over the situation in West Asia, which may weigh on the Indian currency. 

 

Most dealers expect the RBI to intervene by selling dollars if the Indian unit comes under pressure. "If the RBI covers 94.80 levels, then the rupee can rise easily to 94.20 and then to 93.80. These levels have a lot of short sell positions," a dealer at a brokerage firm said. While the RBI Friday acknowledged risks from elevated crude oil prices, it also said that it would do "whatever it takes" to prevent disorderly movement in the currency market. 

 

Dealers now see strong technical resistance for the Indian currency at 94.80 per dollar, a break of which may push the Indian unit to 94.20. The rupee is likely to move in a range of 94.80-95.30 against the dollar Monday. 

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India Rupee: 1-yr premium at 3-mo low as RBI unveils measure for FX inflows

 

	AT 1336 IST	AT 0900 IST	HIGH	LOW	PREVIOUS (AT 1530 IST)
Spot rupee per $1	95.0125	95.7125	95.2425	95.7750	95.7850
1-year dlr/rupee fwd (paise)	263.78	285.00	289.21	263.57	285.46

 

MUMBAI – Dollar rupee forwards premiums fell sharply across all tenures as banks continued to sell dollars for forward delivery to unwind long dollar positions, dealers said. One-year dollar premium forwards fell to a three-month low of 2.77% or 263.57 paise, following the appreciation of the rupee in the spot market after the Reserve Bank of India governor announced a slew of measures to attract dollar inflows in the market. "Measures by RBI have driven some inflow also may have helped rupee," a dealer at private sector bank said. 

 

Meanwhile, some dealers speculate the Reserve Bank of India sold dollars for long-term forward delivery to neutralise its spot interventions, dealers said. "The RBI sold very little around 95.30 levels, there is positive sentiment in the market which helped," a dealer at a foreign bank said.

 

Dealers said near-term forwards fell sharply after the RBI restored the timeline for realising export proceeds to 9 months from 15 months. The one-month dollar rupee forward premium fell to 2.85% from 3.14% Thursday and the two-month dollar rupee forward premium fell to 3.03% from 3.36% at the previous close. However, losses for forward premiums were limited as importers bought dollars for forward delivery, noting the relatively lower levels, they said. 

 

At 1430 IST, the one-year exact period dollar-rupee forward premium was 2.78%, against Thursday's close of 2.98%. On an absolute basis, the premium was 263.78 paise, against Thursday's close of 285.46 paise. 

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India Rupee: Surges as RBI announces several measures to attract FX inflows

 

	AT 1239 IST	AT 0900 IST	HIGH	LOW	PREVIOUS (AT 1530 IST)
Spot rupee per $1	95.4250	95.7125	95.2425	95.7750	95.7850

 

MUMBAI – The rupee rose sharply against the dollar after Reserve Bank of India Governor Sanjay Malhotra Friday announced several measures to attract foreign inflows into India, dealers said. "There was a psychological impact of the RBI measures on the market and dealers were unwinding their long dollar positions, so the dollar-rupee fell to 95.25 a dollar," a dealer at a public sector bank said.

 

The rupee rose to 95.2250 a dollar after the governor announced the measures Friday, from 95.7700 a dollar earlier. The one-year dollar-rupee forward premium fell to an over three-month low of 2.77% or 264.21 paise as on 1308 IST. 

 

Among the various measures, the RBI Friday announced a facility of concessional forex swap till Sept. 30 to incentivise external commercial borrowings by public sector units. It also introduced a similar facility for bearing the full hedging cost to banks for raising fresh 3–5-year foreign currency non-resident deposits till Sept. 30. The government also exempted foreign institutional investors from paying capital gains tax on investment in government bonds. These measures come at a time when the rupee has fallen over 5% since the war in West Asia started on Feb 28.

 

Some dealers said these measures would attract roughly $20 billion in the market in the near term. "While these measures offer long-term benefits, I doubt they will trigger immediate inflows. Investors have no reason to enter this market when they can find better returns elsewhere," a dealer at a foreign bank said. RBI Governor Malhotra said after the monetary policy meeting Friday that the central bank has no target in mind for inflows from foreign exchange measures. 

After the slew of capital inflow measures, most dealers expect the rupee to test 93.50 levels by the end of June, but eventually settle at 95.50 a dollar if geopolitical tensions remain. "Although the reforms will strengthen domestic markets, the market will be tracking crude movements and CPI inflation numbers," a dealer at another foreign bank said. 

 

However, gains for the Indian unit may remain limited as importers will also start hedging heavily, noting the rupee's appreciation. "There has always been a mismatch in levels that importers and exporters trade. Only time can tell how buying and selling will go," a dealer at a private sector bank said. 

 

Dealers said the earlier trend of the RBI selling dollars to limit the rupee's fall will continue as the currency comes under extreme pressure. The RBI has been likely selling around $500 million –$1 billion on an average in the spot market every day this week to defend the rupee, dealers said. India's foreign exchange reserves fell to $682.3 billion as of May 29 from an all-time high of $728.49 billion just before the war started.

 

Crude oil fell slightly despite rising tensions in West Asia. Israel and Lebanon continued strikes just hours after they agreed to a ceasefire. Hezbollah Thursday rejected the truce after Israel attacked the country's southern region Thursday. At 1250 IST, Brent crude oil prices for August delivery fell to $94.60 a barrel from $95.03 Thursday. Brent crude oil prices had fallen to $93.93 a barrel Thursday. 

 

For the day, the rupee is seen moving in the range of 95.00-95.50 per dollar. Dealers see immediate technical resistance for the rupee at 95.20 a dollar. (Divya Moolayattil)

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India Rupee: Rises on expectation RBI may announce steps to support rupee

 

	AT 1239 IST	AT 0900 IST	HIGH	LOW	PREVIOUS (AT 1530 IST)
Spot rupee per $1	95.6600	95.7125	95.6400	95.7400	95.7850

 

MUMBAI- The rupee rose against the dollar in early trade Friday as market participants expect the Reserve Bank of India to announce measures to support the Indian unit, dealers said. "There are some inflows and people are setting up their positions, as they are expecting something positive for the rupee in MPC (monetary policy committee) meeting," a dealer at a public sector bank said.

 

Market participants were optimistic as US President Donald Trump Thursday said he was confident that the US and India will reach a long-awaited trade agreement, which supported the rupee. 
 

Steady crude oil prices, even as Israel attacked Lebanon just a few hours after both countries agreed to resume a ceasefire, supported the rupee. Brent crude oil prices for August delivery were $95.40 a barrel compared with $95.03 Thursday. 

 

Dealers said the importers are holding up their dollar buys ahead of the monetary policy meeting as they expect the RBI to maintain the status quo on rates with a cautious wait and watch approach, while unveiling measures to support the rupee. "There is no buying (dollars) now, importers are waiting for the verdict," one dealer said. 

 

For the day, the rupee is seen moving in the range of 95.60-95.90 per dollar. Dealers see immediate technical resistance for the rupee at 95.60 a dollar.  (Divya Moolayattil)   

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India Rupee: Expected range for rupee - Jun 5

 

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

 

PARTICIPANT	SUPPORT	RESISTANCE
Private-sector bank	95.90	95.30
Private-sector bank	95.90	95.40
Foreign bank	96.00	95.50
Foreign bank	96.10	95.50
Foreign bank	96.15	95.25
Foreign bank	96.00	95.40
Broking firm	95.95	95.40

 

 

 

 

 

 

 

 

 

 

(Divya Moolayattil)

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India Rupee - Asia FX: Down as Israel-Lebanon truce fails; won falls most

 

MUMBAI – Most Asian currencies fell against the dollar in early trade Friday as Israel and Lebanon continued strikes just hours after they agreed to a ceasefire. The ceasefire was conditional on Iran backed militant group Hezbollah halting hostilities and retreating from south Lebanon. Hezbollah Thursday rejected the truce after Israel attacked the country's southern region Thursday.

 

These developments kept investors on an edge as they shifted to safe haven assets. The dollar index rose to 99.45 at 0722 IST, up slighty from 99.43 Thursday. The index had touched a low of 99.17 Wednesday before both countries resumed attacks on each other. 

 

Meanwhile, Iranian Foreign Minister Abbhas Araghchi warned Wednesday that any attack on Lebanon by Israel as part of its campaign against Hezbollah would trigger a "full-scale resumption" of the war. Brent crude oil prices for August delivery rose to $95.40 a barrel from $95.03 Thursday. Brent crude oil prices had fallen to $93.93 a barrel Thursday. 

 

The South Korean won dropped to its weakest level since March 2009 Friday, falling almost a percent against the dollar to 1547.00 from 1532.00 a dollar Friday as foreign investors continued to exit South Korea. The won has now fallen for six consecutive days and has shed over 2% this week.

 

The Thai baht fell 0.5% against the dollar to 32.67 from 32.51, owing to weak market sentiment as hopes for a swift end to the war faded following renewed hostilities between Israel and Lebanon. The Malaysian ringgit also fell 0.5% against the dollar. The Philippine peso fell to 61.53 a dollar from 61.50 Thursday. 

 

The Chinese yuan and the Taiwanese dollar were down marginally against the dollar Friday, while the Hong Kong dollar inched up against the dollar Friday. (Divya Moolayattil)

 

End

 

US$1 = INR 94.9450

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

 

Edited by Saji George Titus

 

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