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Reuters
5 days ago
- Business
- Reuters
Rupee buckles under position unwinding; dollar demand builds
MUMBAI, June 4 (Reuters) - The Indian rupee declined for the sixth time in seven sessions on Wednesday, slipping briefly past 86 to the U.S. dollar, as traders unwound bullish positions amid persistent demand for the greenback. The rupee weakened to 86.0225 on Thursday before recovering marginally to end the day 0.4% lower at 85.90. The Indian currency has declined nearly 1.5% from a high of 84.78 it touched last Monday, making it one of the worst-performing Asian currencies over this period. "There is no real let-up in dollar demand from corporates and it would seem that dollar/rupee shorts are done for now, both in onshore spot and in the non-deliverable forward market," a currency trader at a bank said. Speculators are no more inclined to sell the dollar/rupee pair on rallies, unless "things improve" for the rupee, he said. The rupee has been underperforming regardless of what the dollar index or Asian peers are doing. "Frankly, most of us didn't expect this," the trader said, forecasting more losses for the rupee in the coming days. Forex advisors are urging clients with near-term dollar payables to exercise caution. The risk-reward favours "proactive cover" rather than waiting for dips on dollar/rupee, Kunal Kurani, vice president at Mecklai Financial said. The dollar index was marginally higher on Wednesday. Market focus is on the May U.S. non-farm payrolls report on Friday, which could influence expectations around the Federal Reserve's policy path. Asian currencies were mostly weaker awaiting updates on U.S. trade deals. President Donald Trump's administration has set a Wednesday deadline for revised trade proposals from key partners. A call between Trump and Chinese President Xi Jinping is reportedly in the works amid mutual accusations of backtracking on tariff rollback commitments.
Reuters
06-05-2025
- Business
- Reuters
Rupee ends lower on foreign banks' dollar bids, dip in regional peers
MUMBAI, May 6 (Reuters) - The Indian rupee slipped on Tuesday, tracking mild losses in regional peers and dollar demand from foreign banks, though broader weakness in the greenback limited the decline. The rupee closed at 84.4325 against the U.S. dollar, down 0.2% on the day. The Reuters Tariff Watch newsletter is your daily guide to the latest global trade and tariff news. Sign up here. The offshore Chinese yuan retreated from a near six-month high hit on Monday on signs that the country's central bank may be unwilling to allow rapid appreciation amid sharp rallies seen in other Asian currencies - most prominently, the Taiwanese dollar. The dollar index was down 0.1% at 99.7 while India's benchmark equity indexes, the BSE Sensex (.BSESN), opens new tab and Nifty 50 (.NSEI), opens new tab ended slightly in the red. Traders pointed to dollar bids from at least two U.S. based banks alongside routine importer hedging demand among factors that weighed on the rupee on Tuesday. With the dollar nursing losses of 8% against major peers this year on the back of heightened policy uncertainty, carry trades on emerging market currencies could benefit, per analysts at BofA. Carry investors borrow money from economies with low interest rates to fund investments in higher-yielding assets. BofA reckons that pairing currencies like the Indian rupee and Brazilian real against shorting lower yielding currencies such as Thai baht or Singaporean dollar is also an "appealing relative carry-value strategy." The Federal Reserve's policy decision due on Wednesday is focus this week, where the central bank is widely expected to keep rates steady but the attention will be on how policymakers are likely to navigate the economic of tariffs. Traders are currently pricing in 75 basis points of easing this year with the first move possible in July, as per LSEG data.
