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Reuters
14-05-2025
- Business
- Reuters
Rupee choppy as client flows, weaker yuan counter dollar weakness
MUMBAI, May 14 (Reuters) - The Indian rupee struggled for direction on Wednesday, as comfort from a broadly weaker dollar and modest inflows proved transient in the face of strong demand for the greenback from state-run banks and weakness in the Chinese yuan. The rupee rose to a peak of 85.07 per U.S. dollar in early trading but quickly shed gains to drop to a low of 85.51 before reversing course yet again to quote up by 0.1% at 85.2325 as of 10:50 a.m. IST. Traders said the rupee was bogged down by dollar demand from state-run and foreign banks as well as the yuan's retreat from a six-month peak to a 0.2% drop to 7.21. There were "decent inflows in the morning, but their impact barely lasted in the face of strong dollar bids," including from a large state-run bank, a foreign exchange trader at a Mumbai-based bank said. The dollar index was hovering just shy of the 101 mark, after falling 0.8% in the previous session as U.S. consumer prices rose less than market expectations. Meanwhile, India's consumer prices also increased less than expected at 3.16%, bolstering expectations that the Reserve Bank of India cut interest rates in June. The inflation print "implies room for the RBI to continue its policy easing. Meanwhile, markets may have taken off some geopolitical risk premium on the rupee following the ceasefire with Pakistan, with rupee volatility easing," MUFG Bank said in a note. The rupee's 1-month implied volatility , a gauge of future expectations, was hovering near 5%, well off the peak of above 7% hit last week. Dollar-rupee forward premiums were lower on the day, though, with the 1-year implied yield down 5 basis points at 2.10%, weighed down by an uptick in U.S. bond yields.
Reuters
13-05-2025
- Business
- Reuters
Rupee ends nearly flat; weak equities erode India-Pakistan truce-spurred rise
MUMBAI, May 13 (Reuters) - The Indian rupee closed nearly flat on Tuesday as a fall in local equities and dollar bids from state-run banks ate into the currency's early gains spurred by the cessation of military hostilities between India and Pakistan. The rupee touched a peak of 84.6350 in early trading before ending at 85.33 against the U.S. dollar, nearly unchanged from its close at 85.37 on Friday. The benchmark equity indexes, the BSE Sensex (.BSESN), opens new tab and Nifty 50 (.NSEI), opens new tab, fell about 1.5% each on fears of foreign flows moving to China after its trade pact with U.S. and on profit booking after the previous day's near 4% rally. India's bond and currency markets were closed on Monday. On Monday, U.S. and China announced an agreement to reduce reciprocal tariff reductions for the next three months. "A rally in China stocks might see modest near-term underperformance of India stocks," Nomura said in a note, raising its allocation to Chinese equities to a "tactical overweight." The firm said that it maintains an overweight position on Indian equities but will fund its allocation to China by trimming exposure to India. On the day, two traders also pointed to strong bids from state-run banks weighing on the rupee. A large state-run bank was persistently bidding for dollar, a trader at a mid-sized foreign bank said. The offshore Chinese yuan was nearly flat after touching a six-month peak earlier in the session. The dollar index was slightly lower at 101.6 while U.S. bond yields dipped. Investors await consumer price inflation data from India and the U.S. due later in the day. While India's April CPI is expected to have eased to a near six-year low of 3.27%, month-on-month core U.S. CPI likely rose to 0.3%, according to economists polled by Reuters.
