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The rupee depreciated 12 paise to 83.56 against the US dollar in early trade on July 2, weighed down by the strengthening of the American currency in the overseas markets and elevated crude oil prices.

Forex traders said oil importers and foreign portfolio investors (FPIs) bought US dollars amid rising US yields, and this dragged down the local unit.

At the interbank foreign exchange market, the rupee opened at 83.51 and lost further ground to trade at 83.56 against the greenback in initial deals, registering a fall of 12 paise from its previous closing level.

On Monday, the rupee depreciated 10 paise to settle at 83.44 against the US dollar.

The rupee had dollar inflows and rose to 83.37 on Monday, but was sold-off to 83.44 levels, as oil and FPIs bought dollars looking at rising US yields, said Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP.

On Tuesday, rupee is likely to touch 83.55 before cooling off to 83.45, Bhansali said, adding that the narrow range for the day could be 83.40 to 83.55.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 105.91, higher by 0.02 per cent, following a surge in US treasury yields as investors contemplated a second Trump US presidency.

Brent crude futures, the global oil benchmark, advanced 0.22 per cent to USD 86.80 per barrel.

In the domestic equity market, benchmark indices, Sensex and Nifty, touched lifetime high levels in early trade. However, the indices pared the initial gains and were trading 64.46 points, or 0.08 per cent, lower at 79,411.73 points. The broader NSE Nifty fell 25.55 points, or 0.11 per cent, to 24,116.40 points.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Monday, as they offloaded shares worth Rs 426.03 crore, according to exchange data.

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| Photo Credit: Reuters

The rupee recovered from previous day’s steep fall and traded 3 paise higher at 83.58 against the U.S. dollar in early trade on Friday on the back of sustained inflow of foreign capital and strong domestic equity market sentiment.

Forex traders said the local unit found support from retreating American currency and easing crude oil prices overseas.

At the interbank foreign exchange, the local unit opened at 83.60 and gained further to 83.58 against the greenback, registering a rise of 3 paise from its previous close.

On Thursday, the rupee had plunged 17 paise to hit its over two-month low level of 83.61 against the dollar. The domestic currency recorded its previous lowest closing level of 83.61 on April 16 this year.

Anand James, Chief Market Strategist, Geojit Financial Services, said the rupee’s sharp decline was “partly triggered by significant block deals worth ₹23,000 crore” a day earlier when Vodafone Idea also sold its 18% stake in Indus Towers for ₹15,300 crore.

At the same time, the dollar was “buoyed by wider interest-rate differentials” after major economies began cutting interest rates ahead of the U.S. Federal Reserve, while “parts of Europe faced political turmoil”.

“The dollar’s ascent was also driven by a decline in the pound after the Bank of England decided not to cut interest rates,” Mr. James said.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading lower by 0.01% at 105.21.

Brent crude futures, the global oil benchmark, fell 0.13% to $85.60 per barrel.

In the domestic equity market, the 30-share BSE Sensex climbed 127.75 points, or 0.16%, to 77,606.68. The broader NSE Nifty rose 37.65 points, or 0.16%, to 23,604.65. Both the indices closed the previous session at their highest levels.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Thursday as they purchased shares worth ₹415.30 crore, according to exchange data.

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| Photo Credit: Reuters

The rupee depreciated 10 paise to 83.50 against the U.S. dollar in early trade on June 10, largely due to the rise in the dollar index and US yields.

Forex traders said uncertainty among market players was down as Narendra Modi was sworn in as Prime Minister on Sunday for a record-equalling third term. However, the strength of the American currency in the international market weighed on the local unit.

At the interbank foreign exchange market, the local unit opened at 83.48 and lost further ground to trade at 83.50 against the greenback, registering a loss of 10 paise from its previous closing level.

On Friday, the rupee appreciated 13 paise to 83.40 against the U.S. dollar.

According to Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP, the rupee opened at 83.50 largely due to the rise in the dollar index and U.S. yields.

“The Reserve Bank of India (RBI) should be present protecting the rupee as existing policies of the government will continue with largely the same cabinet as in Modi-2.0,” Mr. Bhansali said.

PM Modi will be heading a 72-member Union Council of Ministers putting emphasis on continuity, youth and experience, while also rewarding partners in the BJP-led National Democratic Alliance (NDA) government.

Along with PM Modi, senior BJP leaders including Rajnath Singh, Amit Shah, Nitin Gadkari, Nirmala Sitharaman and S. Jaishankar, all ministers in the Modi 2.0 Cabinet, took oath as Cabinet ministers at the Rashtrapati Bhavan.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 105.18, higher by 0.29%.

Brent crude futures, the global oil benchmark, advanced 0.31% to $79.87 per barrel.

On the domestic equity market, both benchmark indices, Sensex and Nifty, scaled record high levels in initial trade. The 30-share BSE Sensex was trading 292.08 points, or 0.38% higher at 76,985.44 points. The broader NSE Nifty was trading at 23,291.50 points.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Friday, as they purchased shares worth ₹4,391.02 crore, according to exchange data.

Meanwhile, India’s forex reserves jumped $4.837 billion to a new all-time high of $651.51 billion for the week ended May 31, the RBI said on Friday.

In the previous reporting week, the overall reserves had dropped $2.027 billion to $646.673 billion.

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| Photo Credit: Reuters

The rupee recovered from the lower level and appreciated 7 paise to 83.44 against the U.S. dollar in early trade on June 5, taking cues from domestic equity markets and lower crude oil prices overseas.

Forex traders said the rush for value-buying triggered an uptrend in equity markets, boosting the local currency which saw a steep decline on June 4 after the general elections results showed a less-than-expected majority for the BJP-led NDA.

Also read | Markets bounce back in early trade after massive drop on value-buying at lower levels

At the interbank foreign exchange market, the local unit opened at 83.50 and recovered some lost ground to trade at 83.44 against the greenback, registering a rise of 7 paise from its previous close.

On Tuesday, the domestic currency settled at 83.51 against the dollar.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.09% higher at 104.14.

Brent crude futures, the global oil benchmark, slipped 0.03% to $77.50 per barrel.

On the domestic equity market, the 30-share BSE Sensex climbed 172.89 points to 72,251.94 in early trade. The NSE Nifty went up 39.25 points to 21,923.75.

Both the indices ended more than 6% lower on Tuesday amid fear selling after the counting of votes showed disappointing results for the BJP-led NDA in the Lok Sabha elections with the alliance facing losses in its strongholds in the Hindi heartland, although it is expected to form the government with about 290 seats.

Foreign investors were net sellers of Indian equities on Monday as they offloaded shares worth ₹12,436.22 crore on a net basis. FIIs bought shares worth ₹26,776.17 crore and sold equities worth ₹39,212.39 crore in the cash segment.

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| Photo Credit: Getty Images/iStockphoto

The rupee tumbled 45 paise to close at 83.59 (provisional) against the US dollar on Tuesday as the ruling BJP is unlikely to muster an absolute majority in the Lok Sabha elections.

Besides, a massive sell-off in domestic equities and a strong greenback against major currencies overseas added to the gloom, forex traders said.

At the interbank foreign exchange market, the local unit opened weak at 83.25 and oscillated between a high of 83.23 and a low of 83.59 against the greenback during the session.

The domestic currency finally closed at 83.59 (provisional) against the dollar, registering a fall of 45 paise from its previous close.

On Monday, the rupee closed at 83.14 against the US dollar.

“The rupee depreciated…today as domestic markets fell sharply amid uncertainty over election results outcome. This may have also led to some sell-off by foreign investors. The US dollar recovered from yesterday’s losses on the weak Euro, which fell on disappointing employment data. The US dollar fell on Monday on weaker than expected ISM manufacturing PMI and construction spending,” Anuj Choudhary – Research Analyst at Sharekhan by BNP Paribas, said.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.17 per cent higher at 104.25.

Brent crude futures, the global oil benchmark, dropped 1.88 per cent to USD 76.89 per barrel.

On the domestic equity market, the 30-share BSE Sensex crashed 4,389.73 points, or 5.74 per cent, to close at 72,079.05. The broader NSE Nifty tumbled 1,379.40 points or 5.93 per cent to 21,884.50.

Foreign investors were net buyers of Indian equities on Monday as they purchased shares worth Rs 6,850.76 crore on a net basis. FIIs bought shares worth Rs 23,451.26 crore and sold equities worth Rs 16,600.50 crore in the cash segment.

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| Photo Credit: Reuters

The rupee surged 38 paise to hit its three-month high level of 83.04 against the U.S. dollar in early trade on June 2 boosted by a robust sentiment in domestic equity markets on the back of strong macroeconomic data and exit poll results showing a third term for the Prime Minister Narendra Modi-led government.

A weak American currency and inflow of foreign capital into domestic equities also supported the local unit, forex traders said.

At the interbank foreign exchange market, the local unit opened at 83.09 and gained further to trade at 83.04 against the greenback in initial deals, registering an increase of 38 paise from its previous close. The rupee had breached the 83.00 level on March 18 this year.

The local unit clocked the highest single-day rise since April 2023 when it appreciated by 42 paise.

On Friday, the rupee declined 13 paise to close at 83.42 against the U.S. dollar.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.06% lower at 104.56.

Brent crude futures, the global oil benchmark, fell 0.06% to $81.06 per barrel.

On the domestic equity market, the 30-share BSE Sensex was trading 1,912.00 points, or 2.59% higher at 75,873.31 points. The broader NSE Nifty soared 597.10 points or 2.65% to 23,127.80 points in initial trade.

Most of the exit polls on Saturday predicted that Prime Minister Narendra Modi will retain power for a third straight term, with the BJP-led NDA expected to win a big majority in the Lok Sabha elections.

The finance ministry on Saturday said the country’s Goods and Services Tax (GST) collections grew 10% to ₹1.73 lakh crore in May driven by an increase in domestic transactions, indicating a sustained economic momentum.

Foreign investors were net buyers of Indian equities on Friday as they purchased shares worth ₹1,613.24 crore on a net basis. FIIs bought shares worth ₹95,467.56 crore and sold equities worth ₹93,854.32 crore in one of the record foreign investor activities in the cash segment.

The government data released on Friday showed India’s economy grew by 8.2% in the fiscal year that ended in March, cementing the country’s position as the fastest-growing major economy in the world.

The Central government’s fiscal deficit during 2023-24 at 5.6% of the GDP was better than previous estimates of 5.8% on account of higher revenue realisation and lower expenditure, according to official data released on Friday.

The country’s forex reserves dropped by $2.027 billion to $646.673 billion for the week ended May 24, the Reserve Bank said on Friday. In the previous reporting week, the kitty had reached an all-time high of $648.7 billion after a jump of $4.549 billion.

The rupee appreciated by 4 paise to 83.06 against the U.S. dollar on May 27, 2024. File
| Photo Credit: Reuters

The rupee appreciated by 4 paise to 83.06 against the U.S. dollar on May 27, tracking a positive trend in domestic equities, wherein benchmark indices scaled new peaks.

Forex traders said the weakness of the American currency in the overseas market supported the rupee, while elevated crude oil prices in the international market restricted the upmove.

At the interbank foreign exchange market, the local unit opened at 83.08 and gained further ground to trade at 83.06 against the greenback, registering a gain of 4 paise from its previous closing level.

On Friday, the rupee rallied for the fourth consecutive trading session and settled with a sharp gain of 19 paise at 83.10 against the U.S. dollar.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 104.70, lower by 0.02%.

Brent crude futures, the global oil benchmark, advanced 0.19% to $82.28 per barrel.

On the domestic macroeconomic front, India’s forex reserves jumped $4.549 billion to a new all-time high of $648.7 billion for the week ended May 17, the Reserve Bank said on Friday.

This is the third consecutive week of increase in the overall kitty, which had increased by $2.561 billion to $644.151 billion in the previous reporting week ended May 17.

“India’s robust economic fundamentals and significant foreign exchange reserves, which reached an all-time high of $648.7 billion as of May 17, provide a solid buffer for the RBI to counter any downward pressure on the rupee,” CR Forex Advisors MD Amit Pabari said.

Additionally, substantial foreign direct investment (FDI) inflows are anticipated. The Adani Group is planning to raise $3.5 billion through a Qualified Institutional Placement (QIP), while Torrent Pharma aims to secure $0.60 billion through convertible bonds or debentures, Mr. Pabari added.

“Given these factors, the rupee is expected to appreciate to around 82.80–82.50 in the near-term, with medium-term projections ranging between 82.20 and 82.00,” Mr. Pabari said.

On the domestic equity market, both the benchmark indices scaled new peaks. The 30-share BSE Sensex was trading 168.04 points, or 0.22% higher at 75,578.43 points. The broader NSE Nifty advanced 47.25 points or 0.21% to 23,004.35 points in initial trade.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Friday, as they offloaded shares worth ₹944.83 crore, according to exchange data.

Image used for representational purpose only. 
| Photo Credit: Reuters

The rupee pared its initial gains and settled for the day 5 paise lower at 83.50 (provisional) against the U.S. dollar on Monday, weighed down by elevated crude oil prices.

Forex traders said a weak trend in domestic equities also dented investor sentiments.

At the interbank foreign exchange, the local unit opened at 83.43, then touched an intra-day high of 83.42 and a low of 83.50 against the greenback. The rupee finally settled at 83.50 (provisional) against dollar, registering a fall of 5 paise over its previous close.

On Friday, the rupee inched up 1 paisa to settle at 83.45 against the U.S. dollar.

Forex traders said U.S. dollar demand from importers and a recovery in crude oil prices weighed on the rupee.

“We expect the rupee to trade with a slight positive bias on the rise in risk appetite in global markets. However, any recovery in crude oil prices may cap sharp upside. Any renewed geopolitical tensions in the Middle East may also weigh on rupee at higher levels,” said Anuj Choudhary, Research Analyst, Sharekhan by BNP Paribas.

USD-INR spot price is expected to trade in a range of ₹83.20 to ₹83.70, Mr. Choudhary added.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.06% higher at 105.09.

Brent crude futures, the global oil benchmark, advanced 0.80% to $83.62 per barrel.

On the domestic equity market front, Sensex advanced 17.39 points, or 0.02%, to settle at 73,895.54 points. The Nifty fell 33.15 points, or 0.15%, to close at 22,442.70 points.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Friday, as they offloaded shares worth ₹2,391.98 crore, according to exchange data.

Meanwhile, India’s forex reserves dropped $2.412 billion to $637.922 billion as on April 26, in the third consecutive weekly decline in the reserves, the Reserve Bank of India (RBI) said on Friday.

In the previous reporting week, the overall reserves had declined $2.28 billion to $640.33 billion.

On the macroeconomic front, the seasonally adjusted HSBC India Services Business Activity Index fell from 61.2 in March to 60.8 in April, highlighting one of the strongest growth rates seen in just under 14 years.

Commerce and Industry Minister Piyush Goyal. File photo
| Photo Credit: ANI

New Delhi

Many developed and developing countries including Bangladesh, Sri Lanka, and nations of the Gulf region are keen to start trade in rupee with India as it would help cut transaction costs for businesses, Commerce and Industry Minister Piyush Goyal has said.

He expressed confidence that the development is going to be a “very game-changing” dimension to India’s international trade.

“Bangladesh, Sri Lanka are already talking to us and they want us to start this immediately. Other countries in the Gulf region are looking at that. I think it’ll take some time for people to see the benefits. And then we’ll have more and more developed countries and countries in the Far East also joining the bandwagon. Singapore is already on board to some extent,” he said.

The Minister added that gradually countries are realising that undertaking trade in domestic currencies has several advantages.

Mr. Goyal said that it is now picking up traction and a lot of countries have come forward for this arrangement and are talking to India for that as they would also like to initiate direct transactions between their local currency and the rupee.

“Gradually the conscience is setting in that rather than converting all the transactions into a third currency, both ways, adds significantly to transaction costs,” Mr. Goyal told PTI in an interview.

Undertaking trade in other currencies leads to foreign exchange and transaction losses as there is a cost for conversion. The delays in the movement of money also pushed transactors’ costs.

“We started with the UAE. The UAE was one of the first countries to accept this. It’s now picking up traction. We get a lot of countries who come and talk to us that they would like to also initiate direct transactions between the local currency and the rupee.

“It’s a process which takes time. It involves the central bankers of both nations to create the framework and then it evolves acceptance by importers and exporters,” Mr. Goyal said, adding “when it will take off, it’ll just fly”.

The engagement is also beneficial as the Indian Rupee is mostly stable against most of the international currencies and according to experts, this is one of the reasons that different nations today want to have trade relations built on rupee trade.

The rupee trade is also helping many of the countries, which have dollar shortages.

India has started trade in the rupee with neighbouring countries, including Nepal and Bhutan. The rupee trade mechanism has been initiated to facilitate trade in national currency with Russia, while Sri Lanka has included the rupee in its list of designated foreign currencies.

India’s first-ever payment in rupees for crude oil purchased was from the UAE and that is helping the world’s third largest energy consumer to push for taking the local currency global, as it looks for similar deals with other suppliers.

Changes in FTP

Changes have been made in the FTP (Foreign Trade Policy) to allow international trade settlement in Indian Rupee with a view to making INR a global currency.

In July 2022, the Reserve Bank of India (RBI) decided to allow the settlement of India’s international trade in rupee. Accordingly, authorised Indian banks are permitted to open and maintain special rupee Vostro accounts of the partner trading country’s banks.

These accounts keep the foreign bank’s holdings in the Indian counterpart in rupees. When an Indian trader wants to make a payment to a foreign trader in rupees, the amount will be credited to this Vostro account.

Similarly, in the reverse scenario, the amount to be paid to an Indian trader is deducted from the Vostro account, and credited to the person’s regular account.

Several banks, including HDFC Bank and UCO Bank, have opened special Vostro accounts to facilitate overseas trade in the rupee and many countries have expressed interest to have this arrangement for the local currency trade.

The RBI and Bank Indonesia MoU covers all current account transactions, permissible capital account transactions and any other economic and financial transactions as agreed upon by both countries. 
| Photo Credit: Reuters

The Reserve Bank of India (RBI) and the Bank Indonesia (BI) signed a Memorandum of Understanding (MoU) on March 7 in Mumbai for establishing a framework to promote the use of local currencies viz., the Indian Rupee (INR) and the Indonesian Rupiah (IDR) for cross-border transactions. The MoU was signed by the Reserve Bank of India governor Shaktikanta Das and the Bank Indonesia governor Perry Warjiyo.

The MoU on establishing a framework for cooperation in the area of cross-border transactions in local currencies between India and Indonesia, aims to promote the use of INR and IDR bilaterally.

The MoU covers all current account transactions, permissible capital account transactions and any other economic and financial transactions as agreed upon by both countries.

This framework would enable exporters and importers to invoice and pay in their respective domestic currencies, which in turn would enable the development of an INR-IDR foreign exchange market.

“Use of local currencies would optimise costs and settlement time for transactions,” the RBI said in a statement.

“Use of local currencies in bilateral transactions will eventually contribute to promoting trade between India and Indonesia as well as deepen financial integration and strengthen the long historical, cultural and economic relations between India and Indonesia,” the statement added.