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Time of India
08-05-2025
- Business
- Time of India
Rupee dives 88p to 85.71/$, worst 1-day fall in over 2 years
MUMBAI: The rupee closed at 85.71 against the dollar, down from 84.83 on Wednesday - its worst day since Feb 2023. The currency hit a low of 85.76 during the day, falling more than a rupee from the day's high. Tired of too many ads? go ad free now The rupee rose at the start of the session and remained steady until early afternoon. However, around 2:30pm, sentiment changed following govt's announcement that Pakistan targeted several military locations in the northern and western regions, which were neutralised by India. Dealers said this was seen as an escalation of the conflict. Equity markets, which were in the green until then, also saw a sharp fall after the statement. Some dealers are forecasting that the rupee could breach the 86 level if tensions continue. "Importers delayed buying dollars, anticipating the rupee would strengthen further. However, after govt confirmed that multiple locations were targeted by Pakistan and that India responded, the situation was seen as an escalation, prompting importers and corporates with ECB obligations to hedge their positions. This led to increased demand for dollars, putting pressure on the rupee," said K N Dey, a forex consultant who advises corporates. Dollar-rupee forward premiums also jumped, with the one-year implied yield rising 16 basis points (100bps = 1 percentage point) to a near one-month high of 2.34%. "Historically, the rupee weakened during periods of geopolitical tension, such as the Russia-Ukraine conflict, when India faced indirect economic impacts. Now, with India directly involved in the current conflict, the rupee faces heightened risk, and further escalation could significantly increase pressure on the currency," said Dey. Tired of too many ads? go ad free now Dealers said the escalation of conflict could hurt capital flows if foreign investors turn cautious. The resulting weakening of the rupee would also affect other flows waiting for the currency to stabilise. Part of the dollar's gains on Thursday were also due to a rebound in the greenback. The dollar index, which measures the greenback's strength against a basket of six currencies, was trading 0.46% higher at 100.07. Brent crude, the global oil benchmark, rose 1% to $61.76 per barrel in futures trade. However, given that similar conflicts in the past have not escalated, dealers believe the impact may be temporary. Internationally, the dollar declined sharply in March and April 2025, reflecting reduced investor confidence due to economic policy uncertainty and the impact of new tariffs.
Time of India
24-04-2025
- Business
- Time of India
Re's gains against $ mask losses vs euro, pound
MUMBAI: Most of the recent market focus has been on the rupee's modest gains against the dollar. Yet, a closer inspection of currency trends reveals a broader bout of weakness: The Indian currency slid against a basket of non-dollar counterparts, notably the euro and the pound, complicating the picture for policymakers and market participants. Abhishek Goenka, chief executive of IFA Global, highlighted the rupee's decoupling from the greenback's trajectory. "A weaker rupee against non-dollar currencies is positive for exporters, provided they are not overhedged," he said, noting that the euro and UK pound touched new highs against the rupee. "It's a great time for those receiving inward remittances in these currencies," he added, suggesting risk reversals as a hedging strategy for exporters. He linked the dollar's softening to a waning geopolitical hegemony: "The central role that the US used to play in global geopolitics allowed it to enjoy exceptionalism. That exceptionalism is now under serious threat." Forex consultant KN Dey saw the dollar's retreat as a result of the Trump administration's delay in implementing new tariffs. He pointed to the euro's ascent to 1.15 - significant, as it constitutes 57% of the dollar index. While this bolstered India's foreign exchange reserves, he cautioned that "it would also make travel to Europe and education very expensive". Dey added that European govts, grappling with economic weakness, are unlikely to tolerate prolonged currency appreciation and may act to curb it. Riya Singh of Emkay Global noted that the dollar index (DXY) fell from 110.17 to below 98, a slide that buoyed non-dollar currencies. "As for de-dollarisation, it appears unlikely in the near term," she said. "The recent decline in the US dollar seems more driven by policy uncertainties under the Trump-era narrative, economic slowdown concerns, and expectations of 80-100 basis points of rate cuts by the Fed year." While acknowledging some diversification into gold, Singh argued that "a full-scale shift away from the dollar remains both costly and largely unproven. The dollar still accounts for the majority of global forex reserves, trade settlements, and SWIFT transactions." Harsh Madhusudan Gupta of Ionic Asset expects the rupee to gain both in real and nominal terms, though he is sceptical of de-dollarisation. "The trade surpluses that other countries had with the US were being recycled into US treasuries-i.e. they were funding US debt and helping support the US dollar," he said. "With the imposition of tariffs, the US will still require to import goods as domestic supply would not be able to cater to the demand. It therefore could result in durable inflation in the US, making US real rates more negative. This would cause the dollar to weaken." Stay informed with the latest business news, updates on bank holidays and public holidays . Master Value & Valuation with ET! Learn to invest smartly & decode financials. Limited seats at 33% off – Enroll now!
Time of India
23-04-2025
- Business
- Time of India
Rupee gains against dollar masks a weakening against euro and other currencies
Mumbai: Most of the recent market focus has been on the rupee's modest gains against the dollar. Yet, a closer inspection of currency trends reveals a broader bout of weakness: the Indian currency has slid against a basket of non-dollar counterparts, notably the euro and the pound, complicating the picture for policymakers and market participants. Abhishek Goenka, chief executive of IFA Global, highlighted the rupee's decoupling from the greenback's trajectory. 'A weaker rupee against non-dollar currencies is positive for exporters, provided they are not overhedged,' he said, noting that euro and UK pound have touched new highs against the rupee. 'It's a great time for those receiving inward remittances in these currencies,' he added, suggesting risk reversals as a hedging strategy for exporters. He linked the dollar's softening to a waning geopolitical hegemony: 'The central role that the US used to play in global geopolitics allowed it to enjoy exceptionalism. That exceptionalism is now under serious threat.' Forex consultant KN Dey saw the dollar's retreat as a result of the Trump administration's delay in implementing new tariffs. He pointed to the euro's ascent to 1.15—significant, as it constitutes 57% of the dollar index. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Temukan apartemen yang tersedia di dekat Anda sekarang juga Apartemen untuk disewa | Iklan Pencarian Pelajari Undo While this has bolstered India's foreign exchange reserves, he cautioned that 'it would also make travel to Europe and education very expensive.' Dey added that European governments, grappling with economic weakness, are unlikely to tolerate prolonged currency appreciation and may act to curb it. Riya Singh of Emkay Global noted that the dollar index (DXY) had fallen from 110.17 to below 98, a slide that has buoyed non-dollar currencies. 'As for de-dollarisation, it appears unlikely in the near term,' she said. 'The recent decline in the U.S. dollar seems more driven by policy uncertainties under the Trump-era narrative, economic slowdown concerns, and expectations of 80–100 basis points of rate cuts by the Fed year. ' While acknowledging some diversification into gold, Singh argued that 'a full-scale shift away from the dollar remains both costly and largely unproven. The USD still accounts for the majority of global forex reserves, trade settlements, and SWIFT transactions.' Harsh Madhusudan Gupta of Ionic Asset took expects the rupee to gain both in real and nominal terms, though he is sceptical of de-dollarisation. 'The trade surpluses that other countries had with the US was being recycled into US treasuries—i.e. it was funding US debt and helping support the US Dollar,' he said. 'With the imposition of tariffs, the US will still require to import goods as domestic supply would not be able to cater to the demand. It therefore could result in durable inflation in the US, making US real rates more negative. This would cause the Dollar to weaken.' Stay informed with the latest business news, updates on bank holidays and public holidays . Master Value & Valuation with ET! Learn to invest smartly & decode financials. Limited seats at 33% off – Enroll now!
