Indian rupee ends higher as rate-cut boost for equities blunts dollar strength
MUMBAI: The Indian rupee strengthened modestly on Friday as the Reserve Bank of India's steepest rate cut in five years boosted local equities, helping the South Asian currency eke out a gain even as the dollar firmed against major peers.
The rupee closed at 85.6250 against the U.S. dollar, up from its close at 85.79 in the previous session. The rupee declined 0.2% on the week.
The Reserve Bank of India (RBI) cut its key repo rate by 50 basis points on Friday and slashed the cash reserve ratio (CRR) for banks as low inflation gave policymakers room to focus on supporting growth.
India's benchmark equity indexes, the BSE Sensex and Nifty 50, about 1% each on Friday, posting their best one-day gain in two weeks as the rate cut fuelled domestic growth expectations.
India's benchmark 10-year bond whipsawed between gains and losses as traders digested the central bank's policy moves, including a shift in stance from 'accommodative' to 'neutral.'
Indian rupee falters as bullish exits, dollar strength collide
The yield on the benchmark paper was last quoted a tad higher at 6.2237%. Meanwhile, dollar-rupee forward premiums fell in reaction to the rate cut with the 1-year implied yield dropping 10 basis points to 1.81%.
The Indian central bank's 'larger-than-expected 50 bps rate cut and 100 bps cut in the cash reserve ratio should support INR,' DBS said in a Friday note.
'We will consider lowering USD/INR's forecast if the US Federal Reserve pivots towards a rate cut later this year and sets the stage for more USD weakness,' the noted added.
On the day, the dollar index was up 0.3% at 98.9 in the run-up to release of closely watched U.S. non-farm payrolls data which will offer cues on how the world's largest economy is faring in the face of trade policy spurred uncertainty.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
7 hours ago
- Business Recorder
Asian currencies poised for weekly gains
BENGALURU: Asian currencies were steady on Friday and poised for weekly gains after a phone call between US President Donald Trump and Chinese leader Xi Jinping signalled further trade talks, while most regional equities tracked Wall Street's overnight losses. In India, equities reversed course to rise 0.9% after the Reserve Bank of India delivered a larger-than-expected cut to its key repo rate and lowered the cash reserve ratio to bolster economic growth. 'The RBI may have decided to move quickly to a more appropriate policy rate level. A shift towards neutral stance means more rate cuts may be unlikely in the near-term,' Jeff Ng, Head of Asia Macro Strategy at SMBC, said. The rupee inched up 0.1% to 85.74 per dollar. Other regional currencies moved within a narrow band. The Thai baht and Singapore dollar were largely flat but were on track for weekly gains of 0.5% and 0.4%, respectively. The Malaysian ringgit was up nearly 0.6% for the week. MSCI's index of emerging market currencies was flat after touching an all-time high on Thursday. The index is up 0.5% for the week. The dollar index was little changed, after hitting a six-week low on Thursday, and was headed for a weekly loss of 0.5%. Trump's erratic tariff moves and a worsening US fiscal outlook have triggered a flight from the dollar, prompting analysts to expect most emerging market currencies will retain or build on their gains over the next six months. In their closely watched hour-long phone call on Thursday, Xi pressed Trump to ease trade tensions that have rattled the global economy and warned against provocative moves on Taiwan, according to a summary released by the Chinese government.
Business Recorder
19 hours ago
- Business Recorder
Indian rupee ends higher as rate-cut boost for equities blunts dollar strength
MUMBAI: The Indian rupee strengthened modestly on Friday as the Reserve Bank of India's steepest rate cut in five years boosted local equities, helping the South Asian currency eke out a gain even as the dollar firmed against major peers. The rupee closed at 85.6250 against the U.S. dollar, up from its close at 85.79 in the previous session. The rupee declined 0.2% on the week. The Reserve Bank of India (RBI) cut its key repo rate by 50 basis points on Friday and slashed the cash reserve ratio (CRR) for banks as low inflation gave policymakers room to focus on supporting growth. India's benchmark equity indexes, the BSE Sensex and Nifty 50, about 1% each on Friday, posting their best one-day gain in two weeks as the rate cut fuelled domestic growth expectations. India's benchmark 10-year bond whipsawed between gains and losses as traders digested the central bank's policy moves, including a shift in stance from 'accommodative' to 'neutral.' Indian rupee falters as bullish exits, dollar strength collide The yield on the benchmark paper was last quoted a tad higher at 6.2237%. Meanwhile, dollar-rupee forward premiums fell in reaction to the rate cut with the 1-year implied yield dropping 10 basis points to 1.81%. The Indian central bank's 'larger-than-expected 50 bps rate cut and 100 bps cut in the cash reserve ratio should support INR,' DBS said in a Friday note. 'We will consider lowering USD/INR's forecast if the US Federal Reserve pivots towards a rate cut later this year and sets the stage for more USD weakness,' the noted added. On the day, the dollar index was up 0.3% at 98.9 in the run-up to release of closely watched U.S. non-farm payrolls data which will offer cues on how the world's largest economy is faring in the face of trade policy spurred uncertainty.
Business Recorder
19 hours ago
- Business Recorder
Russian Urals oil to India sells at narrowest discounts since 2022, traders say
MOSCOW/NEW DELHI: Discounts for Russian flagship Urals crude oil for delivery to Indian ports in July hit their narrowest levels since 2022 as spot supplies have tightened, four traders involved in the market said on Friday. Narrowing discounts and tight spot supplies are nudging Indian refiners to scout for alternatives through buying tenders. Spot discounts for Urals crude narrowed to $2.25 per barrel on average for cargoes arriving in India in July, from $2.70 to $3.10 per barrel to dated Brent on delivery ex-ship (DES) basis in the previous month, the sources said. That is the narrowest discount for Urals oil cargoes sold to India since the Ukraine war broke out in 2022. India became the largest buyer of Russian seaborne crude after Moscow diverted its energy supply away from the European Union which imposed a ban. India's GAIL sells LNG cargo as early monsoons cause weak power demand, say sources Some Indian refiners which do not have long-term supply agreements with Russian oil companies are not getting enough Urals oil in July, the sources said. India's largest private refiner, Reliance Industries, locked in a term supply contract with Russian oil giant Rosneft last year, which reduced the availability of Urals in the spot market, they said. Russian oil traders cited higher demand for the grade from refiners in Turkey, which has recently increased buying, boosting competition with Indian refiners over the supply. Turkey's largest oil refiner, Tupras, resumed buying Urals in April after stopping earlier this year, because of tougher U.S. sanctions on Moscow. Two of the traders also said improving refining margins globally also helped boost Russian oil demand as refiners are eager to increase crude runs. India remains the biggest buyer of Russian Urals oil by sea, with imports hitting a 10-month high in May.
