Informist, Friday, Apr. 25, 2025

By Sourabh Kumar

MUMBAI – The rupee ended the day sharply lower against the dollar, under pressure primarily from overseas investors who withdrew funds from Indian markets on fears of escalation in tensions between India and Pakistan, dealers said. 

"FPIs became net sellers after some buying in the morning," a dealer at a private bank said. "We have seen a sell-off of equities as well." After moving in a range of nearly 58 paise, the largest intraday movement since Feb. 11, the Indian currency settled at 85.4500 against the greenback. On Thursday, the rupee had settled at 85.2600 a dollar.

Importers also raised their dollar purchases sharply on expectations that India-Pakistan relations may deteriorate over the weekend. This pushed the rupee further down, dealers said.

The rupee opened on a higher note against the dollar Friday, and none of the dealers had expected it to come under pressure during the day, with a few even expecting it to rise above 85 a dollar. Shortly after open, the rupee did rise a bit to touch the day's high of 85.0775 a dollar, as foreign banks sold the greenback for foreign portfolio investments into the gilt market, dealers said. 

However, such foreign fund inflows supported the rupee only till the first hour of trading, after which the Indian currency started falling due to media reports about an escalation in India-Pakistan tensions. 

The Pakistan Army had fired from multiple posts along the Line of Control throughout Thursday night, which was followed by retaliation from the Indian side, as per media reports. After this news grabbed the attention of market players, the rupee came under pressure, as foreign investors started to purchase the greenback, exiting from both gilt and equity markets, dealers said.

On Wednesday, India had cut ties with Pakistan, citing cross-border linkages in the Pahalgam terror attack, which claimed at least 26 lives and left many injured. India had suspended the Indus Waters Treaty of 1960 with Pakistan, in addition to other retaliatory measures against the neighbouring country. In response, Pakistan also suspended bilateral agreements with India and closed its airspace to Indian airlines.

Apart from foreign portfolio investors, importers also purchased dollars in large quantum, which drove the rupee further down, dealers said. "There was panic buying (of dollars) in the market and that is why it (dollar/rupee) went above 86.60 a dollar, but it did not sustain," another dealer at the private bank said. 

The rupee hit the day's low of 85.6550 a dollar within the first two hours of trade. However, the Indian currency did not sustain such higher levels, and quickly rose above 85.60 a dollar. Exporters took advantage of the relatively higher dollar/rupee levels and were aggressive in selling the greenback, which limited the fall in the Indian rupee, dealers said.

A few dealers also speculated that the Reserve Bank of India may have intervened in the currency market, primarily to stabilise the dollar/rupee movement, which also managed to keep the rupee from falling more.

The dollar index remained steady during the day. The index, which measures the strength of the greenback against a basket of six major currencies, was at 99.68 at 1530 IST, slightly higher than 99.29 Thursday, but down from 99.78 Wednesday. The rupee ended the week down 0.1% against the greenback, whereas it rose 0.8% last week. 

FORWARDS

Premiums on the dollar/rupee forward contract ended higher across most tenures Friday as banks purchased dollars for forward delivery, taking advantage of the arbitrage between the onshore forwards and offshore non-deliverable forward rates, dealers said. 

Premiums also rose as investors' risk sentiment was dampened on prospects of escalation in tensions between India and Pakistan.

A fall in the benchmark 10-year US Treasury yield also pushed premiums higher, dealers said. US Treasury yields fell on hopes of lower tariffs and on the possibility of more interest rate cuts this year by the Federal Reserve, as opposed to what was expected earlier this month. Forwards of a currency pair are reflective of the interest rate differential between the two countries.

At 1530 IST, the one-year exact-period dollar/rupee forward premium was 2.15%, against 2.09% on Thursday. On an absolute basis, the premium was 183.41 paise, against 177.94 paise on Thursday.

OUTLOOK

The foreign exchange market is closed on Saturday. Market participants will keep an eye on any new developments in India-Pakistan relations over the weekend. The Indian rupee may open lower Monday in the case of a deterioration in the relations between India and Pakistan, dealers said.

In the case of the easing of tensions between India and Pakistan, the movement in the dollar index is likely to affect the rupee more, dealers said. Market participants would watch out for any comments by US officials on its trade policies, dealers said.

The dollar index may strengthen if US officials indicate towards lowering of tariffs and easing of tensions with China, dealers said. The local unit may also take cues from movement in the Chinese yuan amid the evolving developments related to the US-China trade tensions, they said. On Monday, the rupee is expected to trade within a range of 85.00-85.70 against the dollar. Dealers see strong technical support for the Indian unit at 85.70 a dollar.

India Rupee - World FX:Dollar regains ground on US-China trade talk optimism

MUMBAI – The dollar index rebounded and remained firm against other major currencies as US President Donald Trump confirmed late Thursday that he met with Chinese officials earlier in the day. "Discussions with Beijing are going well," Trump said and added that he thinks "they will reach a deal".

The dollar also strengthened following media reports that China was considering halting its 125% tariff on certain US imports such as medical devices and ethane, while considering the elimination of the tariff on aircraft leases. The dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.64 at 1646 IST, up from 99.29 Thursday and 99.78 Wednesday.

Further appreciation in the greenback was limited as US Federal Reserve Governor Christopher Waller said he would support an interest rate cut if tariffs start weighing on the job market. Cleveland Fed President Beth Hammack said that a rate cut as soon as June could be possible if clear evidence of economic direction was obtained.

The pound sterling was down 0.3% against the dollar after the UK's Office for National Statistics announced Friday that retail sales rose 0.4% on a monthly basis in March. This reading followed the 0.7% increase recorded in February and came in much better than market expectations of a decline of 0.4% in an FX Street poll. 

The Japanese yen was down 0.5% against the dollar. The yen fell even as Bank of Japan Governor Kazuo Ueda reiterated Thursday that the Japanese central bank would continue to raise interest rates if underlying inflation converged toward its 2% inflation target as projected.

The Swiss franc was down 0.2% against the dollar as Swiss National Bank Chairman Martin Schlegel warned on Friday that an "economic slowdown" in Switzerland couldn't be ruled out. (Kabir Sharma)

India Rupee: Cuts some losses on exporter dlr sales; fall in equities weighs

MUMBAI – The rupee erased some losses because exporters sold dollars to take advantage of relatively higher dollar/rupee levels, dealers said. The rupee had slumped earlier in the day due to a surge in dollar purchases on fears of escalation in tensions between India and Pakistan, dealers said.

"The market has now stabilised around 85.40-85.50 a dollar," a dealer at a state-owned bank said. "Exporters have sold and pressure from outflows have also reduced."

Media reports early Friday said that Pakistani troops had opened fire along the Line of Control overnight, which was followed by a response from the Indian side. Consequently, overseas investors and importers increased their demand for dollars. Importers and foreign investors alike were wary of a further deterioration in India-Pakistan ties, and did not want to remain invested in Indian assets over the weekend, dealers said.

A fall in domestic equities put pressure on the rupee, dealers said. At 1429 IST, Nifty 50 and BSE Sensex were down 0.6% and 0.5%, respectively. The dollar index inched up slightly, which put pressure on the rupee, dealers said. The dollar index, which measures the strength in the dollar against a basket of six major currencies, was 99.70 at 1431 IST, up from 99.29 Thursday but little changed from 99.78 on Wednesday.

Exporters sold dollars in large quantum once the rupee fell below 85.60 a dollar, dealers said. This helped limit the fall in the Indian currency, dealers said. 

For the rest of the day, dealers expect the rupee to move between 85.30 and 85.50 a dollar. Dealers see strong technical support for the Indian unit at 85.50 a dollar.  (Sourabh Kumar)

India Rupee: Premiums jump as bks buy fwd dlrs on onshore-offshore arbitrage

NEW DELHI – Premiums on the dollar/rupee forward contract rose across most tenures on Friday as banks purchased dollars for forward delivery, noting arbitrage between the onshore forwards and offshore non-deliverable forwards rates, dealers said. 

"The offshore points are high due to the risk-off sentiment in the market after the Kashmir news. So everybody is kind of trying to exploit that arbitrage now," said a dealer at a foreign bank. Banks executed sell/buy swaps--sell for immediate delivery and buy for delivery later--in the onshore forwards market, noting a rise in premiums in the offshore NDF market, dealers said.

Risk sentiment among investors dampened owing to prospects of escalation in tensions between India and Pakistan. Hindustan Times posted a video on X, formerly Twitter, saying that the Indian army "reacted strongly" after Pakistani troops opened fire at "multiple locations along the Line of Control" in Jammu and Kashmir. 

Premiums were also supported by a fall in the benchmark 10-year US treasury yield on Friday, dealers said. US Treasury yields declined amid hope of lower-than-feared tariffs and as investors weighed the possibility of an interest rate cut by the Federal Reserve in June. Forwards of a currency pair are reflective of the interest rate differential between the two countries.

Market participants see strong technical support for the one-year dollar/rupee forward premium at 2.00%. At 1420 IST, the premium on the one-year exact-period dollar/rupee forward contract was 183.91 paise, against 177.94 paise on Thursday. On an annualised basis, the premium was at 2.15%, against Thursday's close of 2.09%. (Pratiksha)

India Rupee: Technical levels for rupee - Apr 25

MUMBAI – At 1218 IST, the rupee was at 85.5500 per dollar. At 0900 IST, the rupee was at 85.1800 a dollar, against the previous close of 85.2600. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:

(Sourabh Kumar)

India Rupee: Slumps on fears of escalation in India-Pakistan tensions

MUMBAI – The rupee slumped against the dollar due to substantial foreign fund outflows from the equity and gilt markets due to prospects of escalation in tensions between India and Pakistan, dealers said. 

"There is super panic in the market," a trader at a brokerage firm said. "People are expecting something might happen (between India and Pakistan) over the weekend after today's news."

The rupee opened higher against the dollar Friday as foreign banks sold dollars in early trade for foreign fund inflows into the gilt market, dealers said. However, most of their positions reversed following media reports that Pakistani troops had opened fire along the Line of Control, followed by a response from the Indian side, market participants said.

Citing sources, India Today reported firing by the Pakistan Army from multiple posts along the Line of Control throughout the night.

On Wednesday, India had cut ties with Pakistan, citing cross-border linkages in the Pahalgam terror attack, which claimed at least 26 lives and left many injured. India suspended the Indus Waters Treaty of 1960 with Pakistan, along with other measures against the neighbouring country. In response, Pakistan suspended bilateral agreements with India and closed its airspace to Indian airlines, along with other measures.

Market participants expect deterioration in the relationship between the two neighbours over the weekend, which led to foreign investors pulling funds out of domestic markets, market participants said. This weighed on the Indian currency, which fell nearly 40 paise from Thursday's close. In early trade, the rupee had risen to touch the day's high of 85.0875 a dollar. So far in the day, the Indian currency has fallen to a low of 85.6550 a dollar.

A surge in dollar purchases by importers pushed the rupee further down, dealers said. During the day, the rupee is seen moving between 85.20 and 85.70 a dollar. Dealers see strong technical support for the Indian unit at 85.70 a dollar.  (Sourabh Kumar)

India Rupee - Asia FX: Mixed; Taiwan dlr up as govt proposes $10-bln aid

MUMBAI – Asian currencies were mixed against the dollar on Friday. The dollar index was largely unchanged from Thursday as hopes of easing tensions between the US and China were revived and after US President Donald Trump backed off from his comments on willingness to fire Federal Reserve Chair Jerome Powell.

In the past few days, comments by US Treasury Secretary Scott Bessent signalled a possible de-escalation of trade tensions with China, which supported the dollar. However, the greenback remains under pressure due to the overall uncertainty around the US-China tariff war. 

The dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.78 at 1020 IST, up from 99.29 Thursday and 99.78 Wednesday.

The Taiwan dollar rose 0.1% against the US dollar due to improved confidence in Taiwan's economy after the government proposed on Thursday to spend $10 billion to help mitigate the negative effects of US tariffs. The US had imposed 32% tariff on Taiwan, until US President Donald Trump paused thes etariffs on all countries except China.

The South Korean won was down 0.3% against the greenback as the nation's economy contracted 0.2% on quarter in Jan-Mar. Economists in a poll by The Wall Street Journal had forecast a 0.1% rise on quarter. On a yearly basis, GDP shrank 0.1%, following a rise of 1.2% in the previous quarter, data released Thursday showed. 

The Philippine peso was up 0.3% against the greenback, supported by a rise in the country's benchmark stock index. The Philippines Stock Exchange was up over 2% in early trade Friday. 

The Indonesian rupiah rose 0.3% against the dollar. Indonesia's plan now is to "narrow", or even eliminate its trade surplus with the US, the country's finance minister Sri Mulyani Indrawati told CNBC on the sidelines of the IMF-World Bank Spring Meetings.  (Kabir Sharma)

India Rupee: Sharply higher as foreign bks sell dollars for flows into gilts

MUMBAI – The rupee rose sharply in early trade Friday as some foreign banks sold dollars for foreign fund inflows into the government bond market, dealers said. However, some banks purchased the greenback on behalf of importers, which capped the gains for the Indian currency, dealers said. 

"There are major flows into gilts," a dealer at a state-owned bank said. "There were almost $700 million worth of inflows into gilts yesterday (Thursday), and we are expecting a good amount of flows today as well."

Further, dealers expect foreign fund inflows into domestic equities later in the day, which could drive the rupee higher. "I see the rupee breaching 85.00 a dollar today (Friday)," the dealer mentioned above said. 

As per provisional data, overseas investors purchased around $970 million worth of Indian stocks Thursday. Market participants expect foreign investors to continue purchasing Indian equities on Friday too, which is likely to support the rupee throughout the day.

While a few importers bought dollars, most of them waited for the rupee to move to 85.00 a dollar before purchasing the greenback in large quantum, dealers said. A few dealers expect the Indian currency to rise above 85.00 a dollar on Friday. 

While the rupee is not expected to move lower on Friday, dealers said only a surge in dollar purchases from importers, coupled with the absence of foreign fund inflows, could push the rupee down against the US currency.

The dollar index was slightly higher in early trade Friday, which capped gains for the rupee, dealers said. The dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.80 at 0939 IST, up from 99.29 Thursday and 99.78 Wednesday.

During the day, the rupee is seen moving between 85.05 and 85.25 a dollar. Dealers see strong technical support for the Indian unit at 85.05 a dollar.  (Sourabh Kumar)

India Rupee: Expected range for rupee - Apr 25

MUMBAI – Following are the expected support and resistance levels for the rupee on Friday, as forecast by leading banks and brokerages in an Informist poll: 

(Sourabh Kumar)

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Tanima Banerjee

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2025. All rights reserved.