Rupee flat, forward premiums stick to downtrend as US bond yields rise
MUMBAI, May 20 (Reuters) - The Indian rupee hovered in a thin band on Tuesday, wedged between a modest decline in the Chinese yuan and dollar sales from foreign banks, while dollar-rupee forward premiums extended their decline on the back of rising U.S. bond yields.
The rupee was at 85.4025 against the U.S. dollar as of 11:15 a.m. IST, nearly unchanged from its close of 85.40 in the previous session.
The dollar index was down 0.2% at 100.2, while the offshore Chinese yuan slipped to 7.22. Other regional currencies were mixed.
Dollar-rupee forward premiums, meanwhile, eased on the back of an uptick in U.S. bond yields amid persistent concerns about the fiscal position of the world's largest economy.
The 1-year dollar-rupee implied yield dipped to 2.04%, its lowest since March. The 1-year U.S. Treasury yield was a tad higher at 4.13%.
Expectations of a deep policy easing cycle by the Reserve Bank of India alongside uncertainty about the quantum of rate cuts the Federal Reserve may deliver over 2025 have also weighed on dollar-rupee forward premiums.
It's "quite likely that the 1-year (implied yield) dips below 2% and could find support near 1.90%," a trader at a Mumbai-based bank said.
The 1-year implied yield has eased 35 basis points from its peak of 2.39%, hit earlier in the month, amid worries about weakness in the rupee when the India-Pakistan conflict had flared up.
A cooling of the dollar-rupee overnight swap rate has also helped bring down dollar-rupee forward premiums, traders said.
In the medium term, currency markets are likely to keep their focus on developments surrounding individual countries' trade negotiations with the U.S.
President Donald Trump said last week that India had offered a trade deal that proposed "no tariffs" for American goods.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Independent
2 hours ago
- The Independent
Air India crash likely to trigger India's biggest aviation insurance payout
The deadly Air India crash could become the most expensive aviation insurance claim in India 's history, insurance experts say. Investigators continue to probe what caused the Boeing 787-8 Dreamliner to plummet into a crowded residential complex in to crash in Ahmedabad just 33 seconds after take-off on Thursday. Of the 242 people onboard flight AI171 to London Gatwick, 241 were killed, including 53 British nationals. The flight crashed into a hostel complex at Byramjee Jeejeebhoy Medical College, killing several students and residents on the ground. Only one passenger – a British-Indian man seated in 11A – survived. The total liability could range from $211m to $280m (approximately £166m to £220m), according to estimates reported by Press Trust of India. This includes the full hull value of the aircraft, compensation for victims' families under international aviation law, and payouts for third-party property damage and loss of life on the ground. While the airlines' losses are expected to be covered under aviation 'all-risk' insurance, the payouts for passengers are governed by the Montreal Convention, to which India is a signatory. Under this framework, the minimum compensation per deceased passenger could reach up to 128,821 Special Drawing Rights – about $171,000 or £134,000 – though the actual amount may vary depending on nationality, legal claims, and additional liabilities. Air India has already announced interim compensation of ₹1 crore (around £93,000) for the families of the deceased. Given the large number of international passengers, including from the UK, Portugal and Canada, global reinsurers are expected to absorb much of the financial impact. India's state-run Life Insurance Corporation (LIC) also announced it would relax documentation requirements for victims' families filing death claims, accepting official government records or compensation proof instead of death certificates to ease the process. The full cost of the crash – in terms of lives, property and future safety measures – is still being assessed. Investigations by Indian and international authorities are ongoing, with aviation officials, engineers and anti-terror teams continuing their examination of the crash site and aircraft wreckage. Aviation reinsurance firms in the UK and Europe are expected to bear a major share of the cost, since much of Air India's insurance cover is handled through global reinsurers. The crash is already being described as the world's worst commercial aviation disaster in over a decade and the first fatal crash involving the Boeing 787. India's Directorate General of Civil Aviation has ordered fresh checks on all Boeing 787s flying in the country, while a joint investigation is underway involving Indian authorities, US experts, and a team from Britain's Air Accidents Investigation Branch (AAIB). The airline, now owned by Tata Group, has not commented publicly on the extent of its insurance coverage.
The Independent
4 hours ago
- The Independent
India urgently inspecting all Boeing 787s after deadly Air India crash kills at least 270 people
India is urgently inspecting all Boeing 787s after a devastating Air India crash that claimed at least 270 lives this week, the aviation minister said on Saturday, adding that the authorities were investigating all possible causes. The aviation regulator on Friday ordered Air India to conduct additional maintenance checks on its Boeing 787-8/9 aircraft equipped with GEnx engines, including assessments of certain take-off parameters, electronic engine control tests and engine fuel-related checks. "We have also given the order to do the extended surveillance of the 787 planes. There are 34 in our Indian fleet," aviation minister Ram Mohan Naidu told a media briefing in New Delhi. "Eight have already been inspected and with immediate urgency, all of them are going to be done." Air India operates 33 Boeing 787s, while rival airline IndiGo has one, according to data from Flightradar24. The planes, however, have not been grounded, but a source on Friday told Reuters the Indian government was considering that as an option. Mr Naidu also said the government will look at all possible theories of what led to the crash. Air India and the Indian government were looking at several aspects of the crash including issues linked to its engine thrust, flaps, and why the landing gear remained open as the plane took off and then came down, Reuters has reported. The Boeing 787-8 Dreamliner with 242 people on board bound for Britain's Gatwick Airport began losing height seconds after take-off on Thursday and erupted in a fireball as it hit buildings below, in what has been the world's worst aviation disaster in a decade. At least 270 bodies have been recovered from the site of the plane crash, Dhaval Gameti, president of the Junior Doctors Association at BJ Medical College, told reporters. Only one of the 242 passengers and crew onboard survived while others were killed as the plane struck the medical college's hostel as it came down. The crisis has cast a shadow on Air India, which has for years struggled to rebuild its reputation and revamp its fleet after the Tata Group took over the airline from the Indian government in 2022. Tata's chairman said on Friday the group wants to understand what happened, but "we don't know right now." Mr Naidu said a government panel was investigating the crash and will issue a report within three months. "We are going to improve every necessary thing that is going to come our way, to improve the safety," he said at the briefing, declining questions from journalists. Long wait for families Dozens of anxious family members have been waiting outside an Ahmedabad hospital to collect bodies of loved ones killed in the crash, as doctors were working overtime to gather dental samples from the deceased to run identification checks and DNA profiling. Rafiq Abdul Hafiz Memon, who lost four relatives in the incident, said he was not getting any answers from authorities and was "very hassled". "We have lost our children ... we are not understanding anything. Please help us get information about our children. Tell us when they are going to release their bodies," Mr Memon said. Another father was upset about not being able to get the body of his son, Harshad Patel, saying he was told by authorities it will take 72 hours for DNA profiling. "The authorities are trying to help but our patience is running out," he said. Most bodies in the crash were badly charred and authorities are using dental samples to run identification checks. Jaishankar Pillai, a forensic dentist, told reporters on Friday they had the dental records of 135 charred victims, which can then be matched through reference to victims' prior dental charts, radiographs or other records. Even for doctors, things are getting difficult, as the plane struck a hostel building of the B.J. Medical College, where many of the dead are undergoing identification checks. "Most of us are struggling with our emotions and are mentally disturbed because of the loss of friends and colleagues," said one doctor who did not wish to be named. "The loss of so many colleagues and friends in this incident is difficult."
Reuters
6 hours ago
- Reuters
Malaysia records approved investments of $21 billion in Q1
KUALA LUMPUR, June 11 (Reuters) - Approved investments in Malaysia rose by 3.7% in the first quarter from a year earlier to 89.8 billion ringgit ($21.2 billion), the Malaysian Investment Development Authority said on Wednesday. Foreign investments were 60.4 billion ringgit, or two-thirds of the total, and domestic investments accounted for 29.4 billion ringgit, the authority said in a statement. "The investment environment in 2025 is expected to remain challenging due to continued geopolitical and macroeconomic headwinds stemming from the U.S.-China trade war," Trade Minister Tengku Zafrul Aziz said in the statement. Tengku Zafrul said while protectionist policies and supply-chain frictions would affect corporate decision-making, he expected Malaysia to attract more investment given the broader Asian economy was increasing its share of global GDP. The top three sources of foreign investment in the quarter were Singapore with 28.3 billion ringgit, the United States at 9.9 billion ringgit and China at 7.9 billion ringgit. The services sector attracted 57.8 billion ringgit on the approved investment, the authority said. ($1 = 4.2370 ringgit)
