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Business Recorder
3 days ago
- Business
- Business Recorder
US court ruling on tariffs lifts dollar, dragging Indian rupee lower
MUMBAI: The Indian rupee is set to open weaker on Thursday, weighed by the dollar's strength after a U.S. court blocked President Donald Trump's tariffs. The 1-month non-deliverable forward indicated the local currency would open in the 85.48-85.52 range, compared to a close of 85.36 in the previous session. 'When you think about it, it's a bit counterintuitive that Asia is lower on the back of the U.S. court blocking tariffs,' a currency trader at a Mumbai-based bank said. 'However, that's been the pattern — tariffs imply weaker U.S. growth and a softer dollar.' The trader expects the rupee to find support in the 85.50–85.60 zone, and reckons that the opening decline in the rupee will not sustain. Indian rupee to open nearly flat, holds upper hand as dollar remains vulnerable The dollar index climbed past the 100 level, Asian currencies were down between 0.1% and 0.6%, and U.S. equity futures rallied after a U.S. court blocked Trump from imposing tariffs, saying the U.S. Constitution provides Congress exclusive authority to regulate commerce. The Trump administration filed a notice of appeal and questioned the authority of the court. Trump's tariff plans on U.S. trading partners had drawn warnings from economists about the potential for higher inflation and uncertainty, which had weighed on the dollar. The U.S. court ruling blocking the tariffs brought relief to the dollar, at least for now. 'The question is what's next. First, we think tariffs will likely still be in force during the appeals process, with the Trump administration likely to take the appeals process all the way up to the Supreme Court,' MUFG Bank said in a note. The immediate reaction of the dollar strengthening and Asian currencies weakening may not last considering that the tariffs are likely to stay and with the legal uncertainty potentially crimping US growth and investment plans, it said.
Reuters
3 days ago
- Business
- Reuters
Rupee ends nearly flat, wedged between importer dollar bids and Asia FX uptick
MUMBAI, May 28 (Reuters) - The Indian rupee ended nearly flat on Wednesday, as the impact of month-end dollar demand from importers was offset by an uptick in regional peers. The rupee closed at 85.36 against the U.S. dollar from 85.33 in the previous session. The unit weakened to 85.70 earlier in the session, but recouped most losses as the dollar index eased. Traders built up intra-day shorts on the rupee in anticipation of outflows related to an equity block deal but the price action indicated that the flows did not materialise as expected, a trader at a Mumbai-based bank said. British American Tobacco sold a $1.5 billion stake in Indian consumer goods company ITC ( opens new tab on Tuesday. India's benchmark equity indexes closed slightly in the red. The dollar index was last at 99.5, little changed on the day while the Korean won and Thai baht led gains in Asian currencies with a 0.4% rise. The minutes of the Federal Reserve's May policy meeting are due later in the day and will be in focus for cues on policymakers' thinking on the future trajectory of interest rates amid uncertainty spurred by U.S. trade policies. "The details will be important in providing a sense of the level of conviction on the Fed's willingness to remain on the side-lines in order to assess the uncertainty created by trade tariffs," MUFG Bank said in a note. Interest rate futures are currently pricing in nearly two U.S. rate cuts over 2025. India's overnight index swaps have priced in at least two rate cuts by the Reserve Bank of India as well, supporting a bullish outlook for the country's sovereign bonds.
Reuters
4 days ago
- Business
- Reuters
Rupee to face mild pressure after dollar receives confidence boost
MUMBAI, May 28 (Reuters) - The Indian rupee is poised to open slightly weaker on Wednesday, pressured by a recovery in the struggling U.S. dollar following better-than-expected consumer confidence data. The 1-month non-deliverable forward indicated the local currency would open in the 85.38-85.40 range, compared to the close of 85.33 in the previous session. The rupee briefly climbed past the 85 level against the dollar on Monday, where it had to contend with hedging demand for the U.S. dollar. "It pays to play the 85–86 range on the dollar/rupee pair, regardless of the broader dollar trend," a currency trader at a bank said. With the pair expected to open near the midpoint of that range, the near-term bias remains broadly neutral, he added. The dollar index inched up in Asia, adding to Tuesday's 0.6% advance. The dollar index, down over 8% year-to-date on U.S. trade policy uncertainty and fiscal worries, managed to find support from the improvement in U.S. consumer confidence. The pullback in U.S. Treasury yields also helped. The dollar, in recent days, has been reacting negatively to the rise in yields that was sparked by worries around the U.S. fiscal deficit. On Tuesday, long-term U.S. yields declined, mirroring those in Japan. "The key immediate driver, both from an FX and rates perspective, was news the Japanese Ministry of Finance may adjust debt issuance following a sharp rise in longer-end Japanese yields," MUFG Bank said in a note. Japan will consider trimming issuance of super-long bonds in the wake of the recent surge in yields for the notes, two sources told Reuters on Tuesday, amid policymakers seeking to soothe market concerns about worsening finances. KEY INDICATORS: ** One-month non-deliverable rupee forward at 85.55; onshore one-month forward premium at 15 paise ** Dollar index up at 99.7 ** Brent crude futures up 0.6% at $64.5 per barrel ** Ten-year U.S. note yield at 4.46% ** As per NSDL data, foreign investors bought a net $186.9 million worth of Indian shares on May. 26 ** NSDL data shows foreign investors sold a net $34.8 million worth of Indian bonds on May. 26
Mint
6 days ago
- Business
- Mint
Rupee rises above 85/USD hoisted by fragile dollar, stronger yuan
MUMBAI, May 26 (Reuters) - The Indian rupee and other Asian currencies extended their recent rallies on Monday, as abrupt shifts in U.S. trade policy and concerns over fiscal health kept the dollar under pressure. The rupee rose past the 85 per U.S. dollar mark for the first time in two weeks on Monday, extending its 0.9% surge seen on Friday. The currency was last quoted up 0.4% at 84.82. The dollar index was hovering at an over one-month low of 98.8, down 0.3% on day, after U.S. President Donald Trump set a July 9 deadline for a trade deal with the European Union after threatening a 50% tariff from June 1. Meanwhile, the Chinese yuan's rise to a 7-month high, following provided another tailwind to regional currencies. Asian currencies have risen by as much as 7% on the month so far but the rupee has remained a laggard with a 0.3% decline. "Markets have also seemingly perceived that President Trump is looking for a weaker US dollar versus several Asian currencies as part of bilateral trade negotiations," MUFG Bank said in a note. "Any signs of FX discussion with the US could still be an upside risk to Asian currencies in the near term," the note added. Meanwhile, dollar-rupee forward premiums fell on Monday as the rupee extended its recent rally and near-tenor U.S. bond yields nudged higher. The 1-year dollar-rupee implied yield dipped below the 2% handle for the first time in two months and was last quoted at 1.99%. Uncertainty about future path of Federal Reserve policy rates alongside firm expectations of rate cuts by the Reserve Bank of India may continue to weigh on dollar-rupee forward premiums in the near-term, a trader at a bank said. (Reporting by Jaspreet Kalra; Editing by Nivedita Bhattacharjee)
Reuters
6 days ago
- Business
- Reuters
Rupee rises above 85/USD hoisted by fragile dollar, stronger yuan
MUMBAI, May 26 (Reuters) - The Indian rupee and other Asian currencies extended their recent rallies on Monday, as abrupt shifts in U.S. trade policy and concerns over fiscal health kept the dollar under pressure. The rupee rose past the 85 per U.S. dollar mark for the first time in two weeks on Monday, extending its 0.9% surge seen on Friday. The currency was last quoted up 0.4% at 84.82. The dollar index was hovering at an over one-month low of 98.8, down 0.3% on day, after U.S. President Donald Trump set a July 9 deadline for a trade deal with the European Union after threatening a 50% tariff from June 1. Meanwhile, the Chinese yuan's rise to a 7-month high, following provided another tailwind to regional currencies. Asian currencies have risen by as much as 7% on the month so far but the rupee has remained a laggard with a 0.3% decline. "Markets have also seemingly perceived that President Trump is looking for a weaker US dollar versus several Asian currencies as part of bilateral trade negotiations," MUFG Bank said in a note. "Any signs of FX discussion with the US could still be an upside risk to Asian currencies in the near term," the note added. Meanwhile, dollar-rupee forward premiums fell on Monday as the rupee extended its recent rally and near-tenor U.S. bond yields nudged higher. The 1-year dollar-rupee implied yield dipped below the 2% handle for the first time in two months and was last quoted at 1.99%. Uncertainty about future path of Federal Reserve policy rates alongside firm expectations of rate cuts by the Reserve Bank of India may continue to weigh on dollar-rupee forward premiums in the near-term, a trader at a bank said.
