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New Straits Times
18-07-2025
- Business
- New Straits Times
Rangebound patterns tighten rupee's correlation with Indian stocks
MUMBAI: The Indian rupee and local equities have been increasingly moving in sync over the past month as muted portfolio flows alongside lingering uncertainty over US tariffs continue to cloud investor sentiment. The rupee's 30-day correlation with the benchmark Nifty 50 index has tightened to 0.66, the highest level since mid-May, pointing to the currency's increased sensitivity to moves in local stocks. On the day, the Nifty 50 was down about 0.6 per cent, while the rupee dipped to last quote at 86.2025 per US dollar as of 10:50 am IST, down 0.1 per cent. Local equities diverged from regional peers, led by losses in financial stocks. Asian currencies, meanwhile, were trading mixed and the dollar index was little changed at 98.5. Amidst the largely rangebound moves, the rupee's 1-month implied volatility has eased to a near one-month low of 4.2 per cent, while the stock volatility gauge, India VIX, has retreated to 11.6 from around 14 a month earlier. Foreign portfolio flows, a key driver for both the rupee and local stocks, have also been muted, contributing to rangebound price action, a trader at a state-run bank pointed out. Both the local equity and FX markets are "lacking a clear direction right now," said Apurva Swarup, vice president at Shinhan Bank India, referring to the rangebound moves. News on the US-India trade deal would be key to watch, as it could push stocks and the rupee to move out of their prevailing ranges, Swarup added. The United States is very close to a trade deal with India, US President Donald Trump said earlier this week. Country-specific reciprocal tariff rates on exports to the US are slated to go into effect starting Aug 1. On the day, dollar bids from foreign and local private banks weighed on the rupee, with traders also pointing to heightened demand to buy dollars at the daily reference rate.
Mint
18-07-2025
- Business
- Mint
Rangebound patterns tighten rupees correlation with Indian stocks
MUMBAI, July 18(Reuters) - The Indian rupee and local equities have been increasingly moving in sync over the past month as muted portfolio flows alongside lingering uncertainty over U.S. tariffs continue to cloud investor sentiment. The rupee's 30-day correlation with the benchmark Nifty 50 index has tightened to 0.66, the highest level since mid-May, pointing to the currency's increased sensitivity to moves in local stocks. On the day, the Nifty 50 was down about 0.6%, while the rupee dipped to last quote at 86.2025 per U.S. dollar as of 10:50 a.m. IST, down 0.1%. Local equities diverged from regional peers, led by losses in financial stocks. Asian currencies, meanwhile, were trading mixed and the dollar index was little changed at 98.5. Amidst the largely rangebound moves, the rupee's 1-month implied volatility has eased to a near one-month low of 4.2%, while the stock volatility gauge, India VIX, has retreated to 11.6 from around 14 a month earlier. Foreign portfolio flows, a key driver for both the rupee and local stocks, have also been muted, contributing to rangebound price action, a trader at a state-run bank pointed out. Both the local equity and FX markets are "lacking a clear direction right now," said Apurva Swarup, vice president at Shinhan Bank India, referring to the rangebound moves. News on the U.S.-India trade deal would be key to watch, as it could push stocks and the rupee to move out of their prevailing ranges, Swarup added. The United States is very close to a trade deal with India, U.S. President Donald Trump said earlier this week. Country-specific reciprocal tariff rates on exports to the U.S. are slated to go into effect starting August 1. On the day, dollar bids from foreign and local private banks weighed on the rupee, with traders also pointing to heightened demand to buy dollars at the daily reference rate. (Reporting by Jaspreet Kalra; Editing by Vijay Kishore)
Mint
15-07-2025
- Business
- Mint
Boxed-in Indian rupee revives appetite for selling short-term volatility
MUMBAI, July 15 (Reuters) - The Indian rupee's narrow range over the past two weeks, alongside established support and resistance levels, has sparked interest in selling short-term volatility, with large corporates and interbank players looking to monetise the relative calm. The rupee was quiet on Tuesday, inching up about 0.1% to 85.90 against the U.S. dollar, after trading in a narrow 12-paisa intraday range on Monday. Over the past two weeks, the rupee's weekly trading band has narrowed to 50–60 paisa, pushing 10-day realised volatility down to 4.3% from over 6.5% late last month. During this stretch, the currency has established a well-defined range, finding support near 86.00 and resistance around 85.20–85.30. This is prompting interest from corporates and interbank to sell short-dated volatility. Two bankers said a prominent Indian conglomerate has been inquiring about selling 1-week to 1-month volatility - a strategy that pays off if the rupee continues to trade within its current range. "Volatility selling is making a comeback in a small way, and it makes sense considering the recent price action. The rupee's range feels pretty well locked in for now, and its reaction to headlines has been fairly limited," said the head of FX and rates at a mid-sized private sector bank. He added the rupee was finding support around the 86 level without visible intervention from the Reserve Bank of India, suggesting the market positioning by itself is keeping the dollar/rupee boxed in. Bankers noted that despite last week's barrage of U.S. tariff headlines, the rupee held firm in the 85.90–86.00 zone, underscoring the strength of the current range. The absence of a U.S.-India trade deal hasn't rattled the currency either. "The U.S.–India trade deal news flow is one to watch,' said Apurva Swarup, vice president at Shinhan Bank India. "Depending on how it evolves, we could see the current range on the rupee widen slightly — although not drastically. The broader tone still feels anchored." (Reporting by Nimesh Vora; Editing by Vijay Kishore)
Mint
12-06-2025
- Business
- Mint
Interbank traders turn focus to dollar-rupee forwards as spot treads water
MUMBAI, June 12 (Reuters) - India's FX market traders have increased activity in the dollar-rupee forwards market as spot market price action continues to be rangebound on two-sided client flows and the lack of firm cues. The rupee has hovered in the 85.30 to 86.02 range against the U.S. dollar over June so far with its 1-month realised volatility declining to 4.5%, the lowest in about six weeks. Dollar-rupee forward premiums, meanwhile, have witnessed sharper moves, sparked by the Reserve Bank of India's outsized rate cut last week and changes in expectations of U.S. rate cuts. The 1-year dollar-rupee implied yield fell to its lowest in nearly one year earlier this month while the 1-month forward premium has fallen about 4 paisa to its lowest level since November. The fall in dollar-rupee forward premiums leaves the rupee vulnerable to further depreciation by reducing the currency's "carry trade" appeal and diminishing the incentive for exporters to hedge receivables, analysts said. Speculative activity has picked up on forward premiums as markets are "largely playing the range (on spot USD/INR)," a trader at a large private bank said. To be sure, large moves in global foreign exchange markets could spur the dollar/rupee to break out of its prevailing range, said Apurva Swarup, vice president at Shinhan Bank India. If the dollar index breaks below the 98 level, that could unlock room for rupee appreciation from prevailing levels, Swarup said. On Thursday, the rupee was nearly flat against the U.S. dollar at 85.5125 as of 11:00 a.m. IST. Asian currencies were mostly stronger with the offshore Chinese yuan rising 0.2% as the latest trade truce between Washington and Beijing raised hopes that the world's two largest economies could avoid escalations in their tariff row. (Reporting by Jaspreet Kalra; Editing by Mrigank Dhaniwala)
Economic Times
21-05-2025
- Business
- Economic Times
Rupee's inert reaction to dollar drop confuses bankers; outflows flagged
The Indian rupee is not responding as expected to the dollar's decline. Bankers are puzzled by this muted reaction. The Indian rupee has shown a muted response to the dollar's decline, puzzling bankers who attribute it to foreign portfolio and corporate outflows. While Asian currencies have generally strengthened, the rupee has weakened, pressured by equity outflows potentially shifting towards Chinese markets. Traders anticipate a range-bound rupee, closely monitoring India-U.S. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads The Indian rupee 's muted reaction in the face of a persistent decline in the dollar has stirred up confusion among bankers, with some citing foreign portfolio and corporate payment-related dollar outflows as reasons for the rupee lagging among the day, most Asian currencies rose between 0.1% to 0.6% versus the U.S. dollar but the rupee was little changed at 85.61.A similar pattern persisted throughout May, with the rupee declining by about 1% on the month so far even as its regional peers gained. The Korean won , for instance, is up 3.6% on the month and the offshore Chinese yuan has risen about 1% as have been persistent outflows that have kept the rupee under pressure, but once they subside, the currency should see a bit of appreciation, Apurva Swarup, vice president at Shinhan Bank India.A senior treasury official at a bank pointed out that foreign portfolio outflows from Indian equities had picked up as well amid a possible reallocation towards Chinese equities, contributing to pressure on the the macro-front, there aren't any concerning factors so the price-action seems "flow-dependent," a trader at a state-run bank top of that, key levels like 85.40 and 85.20 have held up repeatedly so the desire to enter long bets on the rupee has diminished, the trader the medium-term, traders expect the rupee to be rangebound while keeping a close eye on developments related to trade negotiations between India and the U.S., which would influence foreign portfolio flows into local equities as dollar, meanwhile, appears to be gripped by a bearish bias on the back of concerns about the fiscal health of the U.S. economy and uncertainty about the future of U.S. trade policies."There is possibly fading market confidence towards US trade and fiscal policies," MUFG Bank said in a note. On the day, the dollar index was down 0.3% and hovering at a two-week low of 99.6.
