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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.
Mint
21-05-2025
- Business
- Mint
Rupee's inert reaction to dollar drop confuses bankers; outflows flagged
MUMBAI, May 21 (Reuters) - 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 peers. On 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 well. There 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 rupee. On the macro-front, there aren't any concerning factors so the price-action seems "flow-dependent," a trader at a state-run bank said. On 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 added. In 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 well. The 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. (Reporting by Jaspreet Kalra; Editing by Janane Venkatraman)
Reuters
21-05-2025
- Business
- Reuters
Rupee's inert reaction to dollar drop confuses bankers; outflows flagged
MUMBAI, May 21 (Reuters) - 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 peers. On 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 well. There 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 rupee. On the macro-front, there aren't any concerning factors so the price-action seems "flow-dependent," a trader at a state-run bank said. On 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 added. In 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 well. The 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.
Time of India
21-05-2025
- Business
- Time of India
Rupee's inert reaction to dollar drop confuses bankers; outflows flagged
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 peers. On 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 well. There 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 rupee. Live Events On the macro-front, there aren't any concerning factors so the price-action seems "flow-dependent," a trader at a state-run bank said. On 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 added. In 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 well. The 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.
Reuters
09-05-2025
- Business
- Reuters
From poise to frenzy: Rupee traders mood swings as India-Pakistan conflict flares up
MUMBAI, May 9 (Reuters) - Indian forex traders had taken the simmering tensions between India and Pakistan in their stride until Thursday afternoon, when news of a flare-up in the military offensive sent the market into a tizzy and the rupee to its worst day in over two years. In early trading hours of Thursday, the rupee had nearly recovered all its losses since India's initial strikes in Pakistan and Pakistan-administered Kashmir on Wednesday. But news in the afternoon of Pakistan striking back in a tit-for-tat sparked a rapid shift in sentiment. In a spectacular U-turn, the rupee went from its peak of near 84.50 per dollar on the day to end down 1% at 85.71, marking its biggest one-day percentage drop in more than two years. While the market was counting on Pakistan not retaliating, Thursday's developments have spurred worries about a wider conflict, said Apurva Swarup, vice president at Shinhan Bank India. "At the same time, the market liquidity is quite thin, which is why there are sharp moves happening right now," Swarup said. The conflict between the two neighbours has intensified further, with the rupee extending losses to a one-month low of 85.8425 on Friday. The Reserve Bank of India stepped in to support the currency. The market's nervousness is also reflected in the rise in the dollar-rupee volatility skew, which signals that demand for options betting the rupee will fall has outpaced appetite for options that wager on its rise. The 1-month dollar-rupee non-deliverable forwards have climbed to their highest in a month, reflecting offshore market participants' concerns about rupee weakness. Indian bonds and the Nifty 50 equity index also extended their losses on Friday. India and Pakistan, currently locked in the worst confrontation in more than two decades, have been clashing since India struck multiple locations in Pakistan on Wednesday in retaliation for a deadly attack in its restive region of Kashmir last month. Pakistan's armed forces launched "multiple attacks" using drones and other munitions along India's entire western border on Thursday night and early Friday, the Indian army said. The rupee could remain under pressure in the near term, said Dhiraj Nim, an FX strategist and economist at ANZ, as the overnight escalations look "severe". So far, there is no credible hint of either side backing down or talking down tensions, Nim said.
