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Reuters
15 hours ago
- Business
- Reuters
Rupee ends slightly lower, but bias for rise to 85 persists
MUMBAI, June 3 (Reuters) - The Indian rupee closed marginally lower on Tuesday, but analysts said the underlying bias continues to be for a gradual appreciation to 85 per dollar amid persistent dollar weakness and easing headwinds. The local currency , which settled at 85.59 against 85.3825 in the previous session, had to contend with mixed cues from Asian peers and a modest recovery in the dollar index, which clawed back part of Monday's losses. "The rupee is currently in a consolidation phase before the eventual breakout," said Anil Bhansali, head of treasury at Finrex Treasury Advisors. "With the dollar broadly struggling, we think a move towards 85.00 could materialize sooner rather than later." While the dollar index recovered modestly, it remains under pressure on U.S. policy and economy concerns. Data released on Monday showed U.S. manufacturing activity contracted in May. Meanwhile, worries over the U.S. fiscal deficit and the tariffs back-and-forth continue to linger. Analysts at HSBC said in a recent note that two key headwinds for the rupee - elevated oil prices and real effective exchange rate overvaluation - have begun to ease. Brent crude has declined meaningfully since March, which will help contain India's trade deficit, while a rally in the euro is expected to reduce the rupee's overvaluation, the analysts said. HSBC projects USD/INR to reach 85 by the end of the April-to-June quarter. Market participants await the Reserve Bank of India's policy decision and the U.S. non-farm payrolls report on Friday.
Reuters
20 hours ago
- Business
- Reuters
Rupee steady after initial dip; implied volatility softens
MUMBAI, June 3 (Reuters) - The Indian rupee held steady on Tuesday after a slight dip at open, while implied volatility eased further as traders awaited key domestic and U.S. events this week. The currency slipped past 85.50 at open, down about 15 paisa from Monday, hitting a low of 85.56. The currency has been rangebound post that and was last quoting at 85.47 to the U.S. dollar. "The rupee has been trading in a relatively narrow range last few days, and today appears no different," said a currency trader at a private bank. "It's essentially a wait-and-watch scenario now, with markets looking for either flows or headlines to provide a directional cue." The dollar was broadly under pressure, weighed down by concerns over the U.S. fiscal deficit and lingering uncertainty around trade policy. However, the rupee failed to capitalise on the modest uptick on most Asian currencies. The rupee's implied volatility has been sliding lower, thanks to the rangebound spot. The 1-month implied volatility is now at 5%, having peaked at over 7% in the second week of May. Traders highlighted two key events on their radar this week - the Reserve Bank of India's policy decision on Friday and the U.S. non-farm payrolls report scheduled for the same day. The RBI is widely expected to cut rates for the third straight meeting on Friday given the benign inflation backdrop. Later that day, the U.S. non-farm payrolls report for May could influence expectations around potential Federal Reserve rate cuts, depending on the strength of labour market data.
Reuters
a day ago
- Business
- Reuters
Rupee caught between US dollar weakness, lack of directional bias
MUMBAI, June 3 (Reuters) - The Indian rupee is likely to open slightly weaker on Tuesday and is expected to hold a narrow range through the day amid a struggling U.S. dollar and the lack of momentum on either side. The 1-month non-deliverable forward indicated an open in the 85.40-85.44 range, versus the close of 85.3825 in the previous session. Non-deliverable forwards suggest the rupee is unlikely to benefit from the up-move in regional peers. The offshore Chinese yuan (CNH=) inched higher past the 7.20 level against the dollar, while the Korean won, Malaysian ringgit, and Indonesian rupiah each rose about 0.3%. "Yesterday, the situation was reverse — the rupee outperformed most Asian peers," said a currency trader at a Mumbai-based bank, adding that overall, the rupee was "simply lacking direction". "We're in a phase where speculative interest has diminished, leading to largely range-bound sessions. Any meaningful move is likely to come only post the two key events on Friday.' On Friday, the Reserve Bank of India is expected to deliver its third successive interest rate cut - a 25-basis-point cut - on the back of benign inflation data. Later in the day, the release of the U.S. non-farm payrolls report for May will offer fresh insight into the health of the U.S. labour market amid ongoing tariff-related uncertainty. Softer non-farm payrolls data could reinforce expectations of a potential Federal Reserve rate cut, keeping the dollar index under mild downward pressure, HDFC Bank said in a note. The U.S. dollar has been under pressure for much of the year, weighed down by policy uncertainty and, more recently, concerns over the fiscal deficit. The dollar index (=USD) is currently trading just 1% above its year-to-date low. Concerns about tariff-related turbulence has resurfaced, adding to the dollar's headwinds. U.S. President Donald Trump signalled plans to double tariffs on steel and aluminium, while U.S.-China trade relations remain uncertain. KEY INDICATORS: ** One-month non-deliverable rupee forward at 85.54; onshore one-month forward premium at 14.25 paisa ** Brent crude futures up 0.5% at $65 per barrel ** Ten-year U.S. note yield at 4.45% ** As per NSDL data, foreign investors sold a net $585.4 million worth of Indian shares on May 30 ** NSDL data shows foreign investors sold a net $712.3 million worth of Indian bonds on May 30
Reuters
7 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
Reuters
26-05-2025
- Business
- Reuters
Rupee ends slightly higher; importer dollar bids, yuan's slip erode early gains
MUMBAI, May 26 (Reuters) - The Indian rupee closed modestly stronger after hitting a two-week high on Monday as a turnaround in the dollar index weighed on regional peers like the Chinese yuan, which touched a seven-month peak earlier in the day. The rupee closed at 85.0.850 against the U.S. dollar, up 0.1% from its close at 85.2125 in the previous session. The currency had risen to 84.79 before trimming gains, as the dollar edged higher against major peers and importer demand emerged above the 85 level, traders said. The dollar index was little changed at 99 after hitting an over month-low of 98.6 in early trading. The offshore Chinese yuan , meanwhile, was last quoted down 0.1% at 7.18 per U.S. dollar. U.S. President Donald Trump's trade policy reversals, as well as his sweeping spending and tax-cut bill currently in legislation, have weighed on the appetite for U.S. assets and the dollar, by extension. "It's a very EM positive environment, and I don't see any reason why that will stop in the near-term," said Brad Bechtel, global head of foreign exchange at Jefferies. Bechtel pointed out that the dollar could be exposed to steeper losses if China allows the yuan to start moving substantially higher. While Asian currencies have risen by as much as 7% on the month so far, the offshore yuan's gains are lower at about 1.4% and the Indian rupee is a laggard with a 0.6% fall over May. Meanwhile, India's benchmark equity indexes closed higher by about 0.6% each on day, tracking gains in most regional peers. The country's benchmark 10-year bond yield eased slightly with analysts expecting the downtrend in bond yields and overnight index swap rates to persist on expectations that the central bank will infuse further liquidity and lower interest rates.
