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Business Recorder
21-07-2025
- Business
- Business Recorder
Indian rupee to track dollar recovery, bond market focused on rate cut bets
MUMBAI: The Indian rupee will likely take cues from how far the dollar's nascent recovery extends this week, while bonds will move based on expectations of interest rate cuts by the local central bank. The rupee closed at 86.1475 on Friday, down 0.4% on the week. It is expected to hover between 85.80 and 86.70 in the near-term with a slight weakening bias, according to traders. After falling for five straight months, the dollar index is up 1.5% in July so far, as strong U.S. economic data and indications that tariffs have started pushing up prices lowered rate-cut expectations in the world's largest economy. Remarks from Federal Reserve Chair Jerome Powell on Tuesday will be in focus, in light of the persistent criticism he has faced from U.S. President Donald Trump for not lowering interest rates. The odds of a U.S. rate cut in September are around 53%, per CME's FedWatch tool. India's ongoing trade negotiations with the U.S. will also be in focus alongside quarterly earnings reports from local companies, which have a bearing on foreign portfolio flows into equities. Forex advisory firm IFA Global recommended that importers cover near-term liabilities around 86, while suggesting exporters hedge around 86.25. Meanwhile, India's 10-year benchmark 6.33% 2035 bond yield , which settled last week at 6.3058%, is expected to move in a range of 6.28% to 6.33%. The yield could rise as New Delhi sells 300 billion rupees ($3.5 billion) of the benchmark on Friday. Focus will be on the potential for rate cuts after India's retail inflation slipped to a more than six-year low in June. An expected further drop to a record low in July is prompting calls for another rate cut. 'With recent high frequency data disappointing and indicating the possibility of growth in India slowing down further…it makes sense to be involved in local currency bonds also on the potential for more support from the RBI further down the line,' said Giulia Pellegrini, lead portfolio manager emerging market debt at AllianzGI. Market participants would also track whether the Reserve Bank of India turns more aggressive in withdrawing liquidity after drawing out 2 trillion rupees from the banking system on Friday.
Reuters
21-07-2025
- Business
- Reuters
Indian rupee to track dollar recovery, bond market focused on rate cut bets
MUMBAI, July 21 (Reuters) - The Indian rupee will likely take cues from how far the dollar's nascent recovery extends this week, while bonds will move based on expectations of interest rate cuts by the local central bank. The rupee closed at 86.1475 on Friday, down 0.4% on the week. It is expected to hover between 85.80 and 86.70 in the near-term with a slight weakening bias, according to traders. After falling for five straight months, the dollar index is up 1.5% in July so far, as strong U.S. economic data and indications that tariffs have started pushing up prices lowered rate-cut expectations in the world's largest economy. Remarks from Federal Reserve Chair Jerome Powell on Tuesday will be in focus, in light of the persistent criticism he has faced from U.S. President Donald Trump for not lowering interest rates. The odds of a U.S. rate cut in September are around 53%, per CME's FedWatch tool. India's ongoing trade negotiations with the U.S. will also be in focus alongside quarterly earnings reports from local companies, which have a bearing on foreign portfolio flows into equities. Forex advisory firm IFA Global recommended that importers cover near-term liabilities around 86, while suggesting exporters hedge around 86.25. Meanwhile, India's 10-year benchmark 6.33% 2035 bond yield , which settled last week at 6.3058%, is expected to move in a range of 6.28% to 6.33%. The yield could rise as New Delhi sells 300 billion rupees ($3.5 billion) of the benchmark on Friday. Focus will be on the potential for rate cuts after India's retail inflation slipped to a more than six-year low in June. An expected further drop to a record low in July is prompting calls for another rate cut. "With recent high frequency data disappointing and indicating the possibility of growth in India slowing down makes sense to be involved in local currency bonds also on the potential for more support from the RBI further down the line," said Giulia Pellegrini, lead portfolio manager emerging market debt at AllianzGI. Market participants would also track whether the Reserve Bank of India turns more aggressive in withdrawing liquidity after drawing out 2 trillion rupees from the banking system on Friday. KEY EVENTS: ** India July HSBC manufacturing, services and composite Flash PMI - July 24, Thursday (10:30 a.m. IST) U.S. ** June existing home sales - July 23, Wednesday (7:30 p.m. IST) ** Initial weekly jobless claims for week to July 14 - July 24, Thursday (6:00 p.m. IST) ** July S&P Global manufacturing, services and composite Flash PMI - July 24, Thursday (7:15 p.m. IST) ** June new home sales units - June 25, Wednesday (7:30 p.m. IST) ** June durable goods - June 26, Thursday (7:30 p.m. IST) ($1 = 86.1180 Indian rupees)
Economic Times
18-06-2025
- Business
- Economic Times
US dollar may stay strong vs EM currencies, but rupee's worst could be over
As of end-November 2024, the 40-currency trade-weighted Real Effective Exchange Rate (REER) stood at 108.13—the highest on record—indicating that the Rupee was significantly overvalued. ADVERTISEMENT By end-April, the REER had corrected to 100.80, suggesting the overvaluation had already been addressed. That's the latest available data, as per the RBI bulletin. However, since then, the Rupee has underperformed its Asian peers. It has been the worst performer—weakening 1.3% against the Dollar—while the offshore Yuan has appreciated 1.1% during the same period. Other Asian currencies have gained between 0.4% and 7%. Based on this trend, the current REER could be close to 98.5, the lowest since February 2019, implying the Rupee is now deeply correction appears to be deliberate. The RBI has tactfully used the period of Dollar weakness, allowing the Rupee to weaken subtly while other currencies appreciated against the though higher than under the previous regime, has remained under control. While the perception might be that the Rupee has been stable, it has actually weakened about 10% against a basket of peer currencies over the past seven months. The RBI has also significantly squared off its short forward book, which had swelled to $90 billion. ADVERTISEMENT The correction in the Rupee's overvaluation can be viewed as a third pillar of monetary easing. While repo rate and CRR cuts have been widely discussed, this form of loosening often goes a correction could support India's emerging manufacturing momentum. ADVERTISEMENT On the flip side, Cross/INR rates have surged to all-time highs—EURINR is approaching 100 and GBPINR has crossed have been advising clients to avoid raising ECBs in EUR, JPY, and CHF. These are alternative reserve currencies and tend to outperform during trade tensions or periods driven by U.S. tax cuts. Forward points have collapsed. ADVERTISEMENT The 5-year forward yield is at 2.7%—an attractive level for those looking to hedge long-term USD believe the Dollar may continue weakening against major currencies, although it could remain firm against Asian and EM currencies. That said, we expect the Rupee's underperformance to end soon. ADVERTISEMENT With the overvaluation largely corrected, the Rupee is likely to align with its peer group. We expect it to track the Yuan more closely going said, recent geopolitical tensions in the Middle East and the spike in crude oil prices pose near-term risks for the Rupee. However, we believe the RBI will act to prevent any one-sided, idiosyncratic the next 7–8 weeks, we expect the Rupee to trade in the 85–87 range, with a slight weakening bias. (The author is Founder and CEO IFA Global) (Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times) (You can now subscribe to our ETMarkets WhatsApp channel) (Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of
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Business Standard
13-06-2025
- Business
- Business Standard
Rupee weakens to 2-month low as crude surges on West Asia tensions
The rupee depreciated sharply against the US dollar on Friday, settling below the ₹86 per dollar mark—a two-month low since 9 April—amid a surge in crude oil prices triggered by escalating tensions in West Asia. The local currency weakened by 49 paise to settle at ₹86.09 per dollar, compared to the previous close of ₹85.60. During the day, the rupee fell as much as 0.65 per cent to touch ₹86.20 per dollar. The Reserve Bank of India (RBI) likely intervened in the foreign exchange market through dollar sales, which helped cap further losses, said dealers. 'The opening was expected to be weak due to geopolitical tensions,' said the treasury head at a private bank. 'RBI intervened; as a result, it briefly touched the 85.95 level. There was some mild inflow too,' he added. 'The Indian rupee weakened sharply today, breaching the ₹86/$ mark, driven by a sudden surge in crude oil prices and heightened geopolitical tensions following Israel's strikes on Iran. Brent crude jumped over 11% intraday, raising concerns over India's import bill, inflation outlook, and current account deficit,' IFA Global said in a note. Brent crude prices surged over 11 per cent to $78.50 per barrel, the highest in more than four months. The rupee was one of the worst-performing Asian currencies on the day, depreciating 0.57 per cent against the dollar. 'Near-term market attention will be directed towards geopolitical developments over the weekend and the impending monetary policy decisions by three major central banks next week,' said Dilip Parmar, Senior Research Analyst, HDFC Securities. In June so far, the rupee has been among the worst-performing Asian currencies, with a depreciation of 0.6 per cent. In the calendar year to date, the domestic currency has depreciated 0.5 per cent against the greenback, while in the financial year so far, it is down by 0.7 per cent. Meanwhile, India's foreign exchange reserves rose by $5.1 billion in the week ended 6 June, driven by a $3.4 billion increase in foreign currency assets, according to the latest RBI data. Total reserves stood at $697 billion, the highest since the week ended 4 October 2024, when reserves touched $701 billion. They had reached an all-time high of $705 billion in the last week of September 2024.
Reuters
06-06-2025
- Business
- Reuters
Rupee nearly flat alongside subdued Asia FX; RBI policy decision awaited
MUMBAI, June 6 (Reuters) - The Indian rupee was nearly flat in early trading on Friday, tracking muted moves in regional currencies as traders awaited the Reserve Bank of India's monetary policy decision. The rupee was at 85.80 as of 09:20 a.m. IST, little changed from its close at 85.79 in the previous session. The RBI's policy decision is due at 10:00 a.m. IST, and the central bank is widely expected to cut rates by 25 basis points (bps) as muted inflation provides ample space to focus on boosting economic growth further. Asian currencies were mostly rangebound on the day, while the dollar index nudged higher to 98.8. Markets showed a muted reaction after U.S. President Donald Trump and Chinese leader Xi Jinping held a much anticipated call while leaving key issues unresolved for future talks. The offshore Chinese yuan was a tad lower at 7.1790. The rupee is expected to hover in the 85.75-86.20 range with a weakening bias in the near-term, FX advisory firm IFA Global said in a note. Dollar-rupee forward premiums, meanwhile, were steady in the run up to the RBI's policy announcement, with the 1-year implied yield at 1.91%. The announcement of fresh measures to inject rupee liquidity into the banking system or dovish commentary from the central bank could push forward premiums lower, a trader at a Mumbai-based bank said. The trader expects the 1-year implied yield to find support at 1.85% in the near term. India's benchmark 10-year bond yield was little changed at 6.1985% while the benchmark equity index, the Nifty 50 (.NSEI), opens new tab, was nearly flat as well on Friday. Later in the day, the focus will be on the release of U.S. non-farm payrolls data, which will offer cues on how trade uncertainty is impacting the U.S. economy and affecting the outlook for rate cuts by the Federal Reserve.
