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Reuters
2 days ago
- Business
- Reuters
Rupee ends higher as rate-cut boost for equities blunts dollar strength
MUMBAI, June 6 (Reuters) - 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 (.BSESN), opens new tab and Nifty 50 (.NSEI), opens new tab, 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.' 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.
Reuters
29-05-2025
- Business
- Reuters
Rupee dips tracking Asian peers after court blocks most US tariffs
MUMBAI, May 29 (Reuters) - The Indian rupee weakened on Thursday, weighed down by a broad rebound in the dollar after a U.S. federal court blocked most of President Donald Trump's "reciprocal tariffs" from taking effect. The rupee was at 85.5325 per U.S. dollar as of 11:30 a.m. IST, down 0.2% on the day. Asian currencies were down between 0.1% to 0.6% while the dollar index rose past the 100 handle. However, the benchmark BSE Sensex (.BSESN), opens new tab and Nifty 50 (.NSEI), opens new tab equity indexes were little changed, lagging behind gains in regional peers as markets cheered the court ruling to block Trump tariffs. A U.S. trade court said in its ruling that the country's Constitution gives Congress exclusive authority to regulate commerce with other countries that is not overridden by the president's emergency powers to safeguard the U.S. economy. The Trump administration has appealed the ruling. Analysts pointed out that the market was showing a knee-jerk reaction to the ruling, which blocked tariff policies that had weighed heavily on the dollar and boosted emerging market currencies, but many added that the initial reaction may lack follow through. "It remains to be seen if this ruling is a game-changer because the Supreme Court has a conservative majority influenced by Trump's appointments," DBS said in a note, adding that "USD is not out of the woods," as concerns about U.S. fiscal health continue to linger. Traders also pointed to dollar bids from foreign banks and local companies weighing on the rupee. It seems like "two-way price action will persist unless it (USD/INR) moves out of the 84.80-86 range," a trader at a Mumbai-based bank said. Dollar-rupee forward premiums fell after markets pared hopes of Federal Reserve rate cuts, pushing near-tenor Treasury yields higher after the release of the minutes of the Fed's May policy meeting. The 1-year dollar-rupee implied yield fell 4 bps to 1.96%, its lowest since December 2024.
Reuters
15-05-2025
- Business
- Reuters
Rupee weakens but Trump's trade deal remark helps contain losses
MUMBAI, May 15 (Reuters) - The Indian rupee fell on Thursday, weighed down by persistent interbank dollar demand, but pared losses after President Donald Trump said that India had offered a zero-tariff trade deal to the United States. The rupee closed at 85.55 against the U.S. dollar, down 0.3% on the day but above its intraday low of 85.7225. The rupee rose above 85.50 in an immediate reaction to Trump's comments but thereafter bids from foreign and local banks picked up, a trader at a Mumbai-based bank said. The dollar bids were likely spurred by corporate demand and modest portfolio outflows, the trader said. The dollar-rupee overnight swap rate also dipped, pointing to heightened demand for cash dollars, which typically indicates a pick up in outflows. India's benchmark equity indexes, the BSE Sensex (.BSESN), opens new tab and NSE Nifty 50 (.NSEI), opens new tab, rose about 1.5% with sentiment boosted by Trump's remarks. The United States is India's largest trading partner, with bilateral trade totalling some $129 billion in 2024. New Delhi has sought to clinch a trade deal with the U.S. within the 90-day pause announced by Trump on April 9 on tariff hikes for major trading partners. India's trade data for the month of April is due after the local currency market closes. Investors also await remarks from Federal Reserve Chair Jerome Powell as well as U.S. economic data for cues on the future trajectory of Fed policy rates and the dollar. The dollar index may find near-term support around 100.20 to 100.25 but a fall below that could prompt it to give back more of its recovery over the last three weeks, ING Bank said in a note.
Reuters
14-05-2025
- Business
- Reuters
Rupee ends tad higher, caught between weaker greenback and interbank dollar bids
MUMBAI, May 14 (Reuters) - The Indian rupee ended modestly stronger on Wednesday as strong dollar demand from state-run and foreign banks eroded positive cues due to broader weakness in the greenback, which helped lift most Asian currencies. The rupee swung between gains and losses through Wednesday's session before ending a tad higher at 85.27 against its close at 85.33 in the previous session. The currency touched a peak of 85.07 in early trade before falling to a low of 85.51 due to persistent dollar bids from a large state-run bank and a clutch of foreign banks, a foreign exchange trader at a Mumbai-based bank said. Modest outflows also weighed on the rupee towards the close of the session, the trader added. The dollar index, meanwhile, was down 0.6% at 100.3 while most Asian currencies gained, with the Korean won up nearly 1.7% on the day. The offshore Chinese yuan, a closely tracked peer of the rupee, was little changed at 7.20. Renewed focus on reserve accumulation by the Reserve Bank of India, slower GDP growth as the impact of tariffs filters through and geopolitical uncertainty "should all mean the currency pair (USD/INR) finds a floor around current levels and moves up from here," ING said in a note. ING holds " mildly bullish," bias on the USD/INR and expects it to rise to 88 over the next 12 months. India's benchmark equity indexes, the BSE Sensex (.BSESN), opens new tab and Nifty 50 (.NSEI), opens new tab ended in the green, 0.2% and 0.3%, respectively, while the yield on the benchmark 10-year bond dipped to 6.29%. Remarks from Federal Reserve policymakers, due later in the day, are in focus for cues on the future path of policy rates after data showed that U.S. consumer prices rose less-than-expected in April.
Reuters
13-05-2025
- Business
- Reuters
Rupee ends nearly flat; weak equities erode India-Pakistan truce-spurred rise
MUMBAI, May 13 (Reuters) - The Indian rupee closed nearly flat on Tuesday as a fall in local equities and dollar bids from state-run banks ate into the currency's early gains spurred by the cessation of military hostilities between India and Pakistan. The rupee touched a peak of 84.6350 in early trading before ending at 85.33 against the U.S. dollar, nearly unchanged from its close at 85.37 on Friday. The benchmark equity indexes, the BSE Sensex (.BSESN), opens new tab and Nifty 50 (.NSEI), opens new tab, fell about 1.5% each on fears of foreign flows moving to China after its trade pact with U.S. and on profit booking after the previous day's near 4% rally. India's bond and currency markets were closed on Monday. On Monday, U.S. and China announced an agreement to reduce reciprocal tariff reductions for the next three months. "A rally in China stocks might see modest near-term underperformance of India stocks," Nomura said in a note, raising its allocation to Chinese equities to a "tactical overweight." The firm said that it maintains an overweight position on Indian equities but will fund its allocation to China by trimming exposure to India. On the day, two traders also pointed to strong bids from state-run banks weighing on the rupee. A large state-run bank was persistently bidding for dollar, a trader at a mid-sized foreign bank said. The offshore Chinese yuan was nearly flat after touching a six-month peak earlier in the session. The dollar index was slightly lower at 101.6 while U.S. bond yields dipped. Investors await consumer price inflation data from India and the U.S. due later in the day. While India's April CPI is expected to have eased to a near six-year low of 3.27%, month-on-month core U.S. CPI likely rose to 0.3%, according to economists polled by Reuters.
