The rupee appreciated 14 paise to 86.46 against the U.S. dollar in morning trade on Monday (January 20, 2025). Image for representative purposes only
| Photo Credit: Reuters

The rupee appreciated 14 paise to 86.46 against the U.S. dollar in morning trade on Monday (January 20, 2025), tracking a positive trend in domestic equities and Asian currencies.

Forex traders said factors like elevated Dollar Index level as well as surging crude oil prices pose significant headwinds for the USD/INR pair.

At the interbank foreign exchange, the rupee opened at 86.48 and touched 86.46 against the greenback, registering a gain of 14 paise over its previous close.

On Friday (January 17, 2025), the rupee had settled at 86.60 against the U.S. dollar.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading lower by 0.22% at 109.10.

Brent crude, the global oil benchmark, fell by 0.12% to $80.69 per barrel.

The overall strength of the American currency and elevated crude oil prices are likely to strain India’s trade balance, creating challenges for sustained rupee appreciation, forex traders said.

As Asian currencies rose Indian rupee opened on a positive note against the U.S. dollar and is expected to trade within a range of 86.40/70 for the day which could become volatile as it progresses, Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP.

“Dips are still busy for importers as we expect the rupee to depreciate by ₹1.50 to 88.00 by March to bring the real effective exchange rate (REER) towards 105 levels,” Mr. Bhansali added.

On the domestic equity market front, the 30-share sensitive index Sensex climbed 398.21 points to 77,017.54 in early trade; Nifty was up 105.15 points to 23,308.35.

Foreign Institutional Investors (FIIs) remained net sellers in the capital markets on Friday (January 17, 2025), as they offloaded shares worth ₹3,318.06 crore, according to exchange data.

India’s forex reserves dropped by $8.714 billion to $625.871 billion in the week ended January 10, the RBI said on Friday (January 17, 2025).

Earlier, the overall kitty dropped by $5.693 billion to $634.585 billion in the week ended January 3, the Reserve Bank of India said.

Image for representative purposes only
| Photo Credit: Reuters

The rupee rebounded from its lowest-ever level and settled 8 paise higher at 86.62 (provisional) against the U.S. dollar on Tuesday (January 14, 2025) as the American currency retreated from record high.

Some recovery in domestic equity markets after the release of macroeconomic numbers also supported the Indian currency even though it remained under pressure due to elevated crude oil prices and continuous outflow of foreign funds.

At the interbank foreign exchange, the rupee opened at 86.57 and touched the intra-day high of 86.45 before closing for the day at 86.62 (provisional) against the greenback, registering a gain of 8 paise from its previous close.

On Monday (January 13, 2025), the rupee logged its steepest single-day fall in nearly two years and ended the session 66 paise down at its historic low of 86.70 against the U.S. dollar. The currency’s previous record one-day fall of 68 paise was witnessed on February 6, 2023.

The local unit has plunged more than Re 1 in the past two weeks from the closing level of 85.52 on December 30. It had breached the 85-per-dollar mark for the first time on December 19, 2024.

The unit had depreciated 18 paise to settle at 86.04 against the U.S. dollar on Friday (January 10, 2025), a day after registering a marginal gain of 5 paise. In the preceding back-to-back sessions on Tuesday (January 7, 2025) and Wednesday (January 8, 2025), it had plunged 6 paise and 17 paise, respectively.

Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said the rupee recovered from all-time lows on a slight bounce back in the domestic markets and a weak U.S. dollar.

“Cooling retail inflation and easing dollar brought some respite to the falling rupee,” he said, but added that the Indian currency is expected to remain weak as crude oil prices continue to remain elevated, raising inflationary pressures.

“Traders may take cues from PPI (producer price index) data from US today and CPI data from US tomorrow. USD-INR spot price is expected to trade in a range of ₹86.40 to ₹86.85,” Mr. Choudhary added.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.39% lower at 109.38.

Brent crude, the global oil benchmark, rose 0.10% to $81.09 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex climbed 169.62 points, or 0.22%, to settle at 76,499.63 points, while the Nifty rose 90.10 points, or 0.39%, to 23,176.05 points.

Foreign institutional investors (FIIs) offloaded equities worth ₹4,892.84 crore on Monday (January 13, 2025).

Government data released on Tuesday (January 14, 2025) showed, wholesale price inflation rose to 2.37% in December 2024, led by a spike in manufactured products even though prices of food items eased.

Retail inflation, however, declined to a four-month low of 5.22% in December amid easing of prices in the food basket, giving headroom to the Reserve Bank of India (RBI) to reduce the key interest rate in upcoming monetary policy reviews, according to the data released on Monday (January 13, 2025).

The inflation based on the Consumer Price Index (CPI) eased for the second month in a row after it breached the RBI’s upper tolerance level of 6% in October.

Image for representative purposes only
| Photo Credit: Reuters

The rupee depreciated 9 paise to close at 85.73 (provisional) against the U.S. dollar on Thursday (January 2, 2025), as strong dollar demand from importers and foreign fund outflows dented investor sentiments.

Forex traders said the dollar gained against most currencies during 2024 and continued to remain on a strong footing this year. Moreover, persistent foreign fund outflows further dented investors’ sentiments.

Additionally, global markets are expected to see low volumes as the holiday season is underway in major economies like those in Europe.

t the interbank foreign exchange, the rupee opened on a weak note and witnessed an intra-day low of 85.79 and a high of 85.68 against the American currency. The local unit settled for the day at 85.73 (provisional), registering a fall of 9 paise over its previous close amid a sharp recovery in domestic equities.

On Wednesday (January 1, 2024), the rupee settled flat at 85.64 against the U.S. dollar.

On December 27, the local currency touched its lifetime intra-day low of 85.80 against the greenback.

“We expect the rupee to trade with a negative bias on strength in the US Dollar and dollar demand from importers. Sustained FII outflows may further pressure the rupee,” said Anuj Choudhary — Research Analyst at Mirae Asset Sharekhan.

“However, any intervention by the Reserve Bank of India (RBI) may support the rupee at lower levels. USDINR spot price is expected to trade in a range of 85.50 to 86, Choudhary added.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.02% lower at 108.46.

Brent crude, the global oil benchmark, rose 0.91% to $75.32 per barrel in futures trade.

Meanwhile, India’s manufacturing sector growth fell to a 12-month low in December, as new business orders and production expanded at softer rates, a monthly survey said on Thursday (January 2, 2025).

The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index was at 56.4 in December, down from 56.5 in November, indicating a weaker improvement in operating conditions.

In the domestic equity market, the 30-share BSE Sensex settled at 1,436.30 points, or 1.83%, up at 79,943.71 points, while the Nifty was higher by 445.75 points, or 1.88%, to 24,188.65 points.

Foreign Institutional Investors (FIIs) offloaded ₹1,782.71 crore in the capital markets on a net basis on Wednesday (January 1, 2025), according to exchange data.

On the domestic macroeconomic front, the total gross goods and services tax (GST) revenue grew 7.3% to ₹1.77 lakh crore in December as compared to ₹1.65 lakh crore in the same month a year ago.

In November, GST mop-up was Rs 1.82 lakh crore with 8.5% annual growth. The highest-ever collection was in April 2024 at over ₹2.10 lakh crore.

The rupee recovered from its lowest level of 84.46 to settle 4 paise higher at 84.42 against the U.S. dollar
| Photo Credit: Getty Images/iStockphoto

The rupee traded in an almost flat note and settled 1 paisa lower at 84.43 (provisional) against the U.S. dollar on Tuesday (November 19, 2024), as support from positive domestic equity markets and lower crude oil prices was negated by the strength of the American currency in the overseas market.

Forex traders said the Ukraine-Russia war took a new turn with Russia updating its nuclear doctrine and Ukraine aimed American missiles at Russia. Safe haven assets like Gold, JPY, CHF and to some extent dollar were bought and the rupee felt the heat and was sold at the closing hours.

At the interbank foreign exchange, the rupee opened at 84.39 and stayed range-bound throughout the session. It finally settled at 84.43 (provisional) against the greenback, down 1 paisa from its previous close.

On Monday (November 18, 2024), the rupee recovered from its lowest level of 84.46 to settle 4 paise higher at 84.42 against the U.S. dollar.

Praveen Singh, Associate VP, Fundamental Currencies and Commodities, Sharekhan by BNP Paribas, said the USD-INR pair is likely to trade in this range in the near term until the U.S. yields break higher decisively. The 10-year U.S. yields face a crucial resistance at 4.50%.

“Traders will closely monitor the assembly elections in Maharashtra and Jharkhand. In addition, India’s PMIs data slated to be released on Friday (November 15, 2024) will also be on traders’ radar,” he added.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading higher by 0.15% at 106.35.

Brent crude, the global oil benchmark, declined by 0.42% to $72.99 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex rose 239.37 points, or 0.31%, to close at 77,578.38 points, while Nifty climbed 64.70 points, or 0.28%, to settle at 23,518.50 points.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Monday (November 18, 2024), as they offloaded shares worth ₹1,403.40 crore, according to exchange data.

Forex traders said the rupee is likely to remain under pressure unless there is a softening in the dollar index or a slowdown in foreign fund outflows. File
| Photo Credit: The Hindu

Declining for the fourth straight session, the rupee dropped 2 paise to hit a new lifetime low of 84.39 (provisional) against the U.S. dollar on Monday (November 11, 2024), weighed down by persistent foreign fund outflows and a muted trend in domestic equities.

Forex traders said the rupee is likely to remain under pressure unless there is a softening in the dollar index or a slowdown in foreign fund outflows.

At the interbank foreign exchange, the rupee opened at 84.38 against the U.S. dollar. During the session, the local currency touched a high of 84.37 and a low of 84.39. It finally settled at 84.39 (provisional), registering a loss of 2 paise against its previous close.

On Friday (November 8, 2024), the rupee dropped 5 paise to hit the lowest level of 84.37 against the U.S. dollar, registering a decline for the third straight session.

In the last four sessions, the local unit has lost 30 paise against the greenback.

The USD-INR pair fell to a record low on Monday (November 11, 2024) as the U.S. dollar index strengthened on Donald Trump’s growth agenda optimism. Foreign investors, following an outflow of $11 billion in October, have withdrawn around $1.50 billion from Indian equities in November.

The Reserve Bank’s intervention may support the domestic currency. Moreover, traders look forward to the India and the U.S. CPI inflation data scheduled to be released this week, Praveen Singh — Associate VP, Fundamental Currencies and Commodities, Sharekhan by BNP Paribas, said, adding the domestic currency is expected to trade with a bearish tilt in the near future.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.29% higher at 105.30.

Brent crude, the global oil benchmark, fell 1.04% to $73.10 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex rose 9.83 points, or 0.01%, to close at 79,496.15 points, while Nifty fell 6.90 points, or 0.03%, to settle at 24,141.30 points.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Friday (November 8, 2024), as they offloaded shares worth ₹3,404.04 crore, according to exchange data.

Meanwhile, India’s forex reserves declined by $2.675 billion to $682.13 billion for the week ended November 1, the RBI said on Friday (November 8, 2024).

In the previous week, the overall reserves had dropped by $3.463 billion to $684.805 billion. At September-end, the reserves had hit an all-time high of $704.885 billion.