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Time of India
3 days ago
- Business
- Time of India
What led to rupee becoming Asia's worst performing currency in May?
After appreciating towards 83.94/$1 levels in April, the combined impact of tariff uncertainties, border tensions and expectations of further monetary easing by the central bank made the rupee the worst performing currency in Asia in May. The rupee weakened 1.27% in May, from 84.48/$1 at the beginning of the month to 85.57/$1 as of May 30, and retreated the most in Asia. Agencies 'There have been unwinding of long rupee positions amid tariff uncertainties while importers are taking advantage of lower forward premiums,' said Kunal Sodhani, head of treasury at Shinhan Bank India. One year dollar-rupee forward premiums fell to 1.94%, from 2.34% in early April. Some positive cues like lower inflation, growth prospects and a softer dollar index have helped the rupee to trade around the 85.50/$1 levels, but global economic factors can add to further weakness. 'A sharp rebound in the US dollar, an unexpected shift in the Federal Reserve's interest rate outlook, or delays in the India-US trade negotiations could dampen optimism in the near future,' said Sugandha Sachdeva, founder of SS WealthStreet, a New Delhibased research firm.
Mint
21-05-2025
- Business
- Mint
Rupee's inert reaction to dollar drop confuses bankers; outflows flagged
MUMBAI, May 21 (Reuters) - The Indian rupee's muted reaction in the face of a persistent decline in the dollar has stirred up confusion among bankers, with some citing foreign portfolio and corporate payment-related dollar outflows as reasons for the rupee lagging among peers. On the day, most Asian currencies rose between 0.1% to 0.6% versus the U.S. dollar but the rupee was little changed at 85.61. A similar pattern persisted throughout May, with the rupee declining by about 1% on the month so far even as its regional peers gained. The Korean won, for instance, is up 3.6% on the month and the offshore Chinese yuan has risen about 1% as well. There have been persistent outflows that have kept the rupee under pressure, but once they subside, the currency should see a bit of appreciation, Apurva Swarup, vice president at Shinhan Bank India. A senior treasury official at a bank pointed out that foreign portfolio outflows from Indian equities had picked up as well amid a possible reallocation towards Chinese equities, contributing to pressure on the rupee. On the macro-front, there aren't any concerning factors so the price-action seems "flow-dependent," a trader at a state-run bank said. On top of that, key levels like 85.40 and 85.20 have held up repeatedly so the desire to enter long bets on the rupee has diminished, the trader added. In the medium-term, traders expect the rupee to be rangebound while keeping a close eye on developments related to trade negotiations between India and the U.S., which would influence foreign portfolio flows into local equities as well. The dollar, meanwhile, appears to be gripped by a bearish bias on the back of concerns about the fiscal health of the U.S. economy and uncertainty about the future of U.S. trade policies. "There is possibly fading market confidence towards US trade and fiscal policies," MUFG Bank said in a note. On the day, the dollar index was down 0.3% and hovering at a two-week low of 99.6. (Reporting by Jaspreet Kalra; Editing by Janane Venkatraman)
Time of India
21-05-2025
- Business
- Time of India
Rupee's inert reaction to dollar drop confuses bankers; outflows flagged
The Indian rupee 's muted reaction in the face of a persistent decline in the dollar has stirred up confusion among bankers, with some citing foreign portfolio and corporate payment-related dollar outflows as reasons for the rupee lagging among peers. On the day, most Asian currencies rose between 0.1% to 0.6% versus the U.S. dollar but the rupee was little changed at 85.61. A similar pattern persisted throughout May, with the rupee declining by about 1% on the month so far even as its regional peers gained. The Korean won , for instance, is up 3.6% on the month and the offshore Chinese yuan has risen about 1% as well. There have been persistent outflows that have kept the rupee under pressure, but once they subside, the currency should see a bit of appreciation, Apurva Swarup, vice president at Shinhan Bank India. A senior treasury official at a bank pointed out that foreign portfolio outflows from Indian equities had picked up as well amid a possible reallocation towards Chinese equities, contributing to pressure on the rupee. Live Events On the macro-front, there aren't any concerning factors so the price-action seems "flow-dependent," a trader at a state-run bank said. On top of that, key levels like 85.40 and 85.20 have held up repeatedly so the desire to enter long bets on the rupee has diminished, the trader added. In the medium-term, traders expect the rupee to be rangebound while keeping a close eye on developments related to trade negotiations between India and the U.S., which would influence foreign portfolio flows into local equities as well. The dollar, meanwhile, appears to be gripped by a bearish bias on the back of concerns about the fiscal health of the U.S. economy and uncertainty about the future of U.S. trade policies. "There is possibly fading market confidence towards US trade and fiscal policies," MUFG Bank said in a note. On the day, the dollar index was down 0.3% and hovering at a two-week low of 99.6.
The Sun
02-05-2025
- Business
- The Sun
Rupee hits six-month high before retreating on dollar bids
MUMBAI: The Indian rupee soared past 84 per U.S. dollar to touch a near six-month peak on Friday before reversing course on the back of likely dollar buying intervention by the central bank, via state-run lenders, traders said. Strong portfolio inflows and culling of bearish positions on the local currency had hoisted it to a peak of 83.78 earlier in the day, its highest since October 2024, but dollar bids from state-run banks and importers ate into the gains. The rupee closed at 84.58, down 0.1% on the day. It rose 1% for the week, though, bolstered by inflows into Indian equities and optimism about a U.S.-India trade deal. U.S. President Donald Trump said earlier this week that he has 'potential' trade deals with India, South Korea and Japan. The rupee's sharp rally over the last two months has pulled it up by over 3%, helping it wipe out most of its losses since Donald Trump's victory in the U.S. elections - and ensuing policy changes - hurt risk assets across the board. But the currency's sharp moves have also pushed up the rupee's 1-month realised volatility, which has risen to an over two-year peak of 5.1%. 'Volatility may continue to persist with 83.44 acting as a strong base, while 85.60 is a broader resistance,' said Kunal Sodhani, vice president at Shinhan Bank India. The dollar index, meanwhile, was down 0.3% on Friday at 99.8, heading into closely watched U.S. labour market data, due later on Friday. Asian currencies rose by 0.6% to 1.4% as signs of easing U.S.-China trade tensions sparked optimism following weeks of tumult. The offshore Chinese yuan touched an over one-peak above 7.23 per dollar. 'The dollar's recovery trend could be put on pause today, but may resume soon as US assets can keep benefiting from the more subdued tone on US trade policy,' ING Bank said in a note.
Reuters
02-05-2025
- Business
- Reuters
Rupee hits six-month peak before retreating on likely central bank intervention
MUMBAI, May 2 (Reuters) - The Indian rupee soared past 84 per U.S. dollar to touch a near six-month peak on Friday before reversing course on the back of likely dollar buying intervention by the central bank, via state-run lenders, traders said. Strong portfolio inflows and culling of bearish positions on the local currency had hoisted it to a peak of 83.78 earlier in the day, its highest since October 2024, but dollar bids from state-run banks and importers ate into the gains. The rupee closed at 84.58, down 0.1% on the day. It rose 1% for the week, though, bolstered by inflows into Indian equities and optimism about a U.S.-India trade deal. U.S. President Donald Trump said earlier this week that he has "potential" trade deals with India, South Korea and Japan. The rupee's sharp rally over the last two months has pulled it up by over 3%, helping it wipe out most of its losses since Donald Trump's victory in the U.S. elections - and ensuing policy changes - hurt risk assets across the board. But the currency's sharp moves have also pushed up the rupee's 1-month realised volatility, which has risen to an over two-year peak of 5.1%. "Volatility may continue to persist with 83.44 acting as a strong base, while 85.60 is a broader resistance," said Kunal Sodhani, vice president at Shinhan Bank India. The dollar index, meanwhile, was down 0.3% on Friday at 99.8, heading into closely watched U.S. labour market data, due later on Friday. Asian currencies rose by 0.6% to 1.4% as signs of easing U.S.-China trade tensions sparked optimism following weeks of tumult. The offshore Chinese yuan touched an over one-peak above 7.23 per dollar. "The dollar's recovery trend could be put on pause today, but may resume soon as US assets can keep benefiting from the more subdued tone on US trade policy," ING Bank said in a note.
