FX – WEEKLY UPDATE :

Weekly SYNOPSIS: 25/07/2025

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Currency Map:

Currency Pairs	WEEK CLOSE	PRIOR WEEK CLOSE	% change
USD/INR	86.53	86.12	0.47
EUR/INR	101.73	100.15	1.57
GBP/INR	116.79	115.73	0.91
JPY/INR	58.87	57.93	1.62

Brent Crude closed at USD 68.50 VS previous week close of USD 69.50. Gold closed at USD 3337. Nifty closed at 24837 vs prior week close of 24968. 10 Year G-SEC Yield is now at 6.35%.

Major developments: USDINR traded in the 86.19-86.63 range last week, and Rupee declined 41 ps against USD w/w. EUR climbed 1.57% w/w and GBP climbed 0.91% w/w against Rupee.

Indian benchmark Equity indices declined 0.52% w/w. 10 Year G-SEC Yield closed at 6.35%.

1-year fwd premia is at 2.02% p.a.

FX reserves stood at USD 695.4 bn, as on July 18 th. Reserves declined US D 1.18 bn w/w.

In July, FII’S sold 7332 Cr of Indian Equities and sold Rs 1056  cr of debt.

Rupee continued to decline due to FII selling and RBI’S decision to not roll over maturing swaps. Large corporate outflows also contributed to Rupee weakness. Latest Corporate earning seasons has not been encouraging for Large cap stocks. IT earnings is muted and many large banks have reported asset quality deterioration.

India and UK signed FTA deal.  There is still no clarity on India-US trade deal.

Expect USDINR to trade in the 85.50-86.60 zone in coming weeks.

Hedging advise: Imports can be hedged at 85.50 and exports can be hedged now close to 86.50.

 

Global developments: EU-US trade deal and India- US trade deal will be in focus ahead of Aug 1 st deadline. US has concluded trade deal with Japan. U.S.-Japan goods trade is worth about $227 billion, so a trade deal is certainly significant. Imports from Japan ($148.4 billion last year) will now face a 15% so-called reciprocal tariff, which is lower than the 25% imposed earlier. Tariff talks, Fed meeting and US employment data are focus events for the week. US PCE data will also be in focus for Sept rate cut decision. US is yet to conclude deals with China, EU, Mexico and Canada.

ECB held rates steady at 2% and ECB Chairperson delivered optimistic comments. She said that inflation is at 2% and the economy is evolving in a “relatively favorable” manner. She also reiterated that the ECB will continue to rely on a broad set of economic data in shaping its policy, not individual datapoints. That suggests a steady hand into the September meeting, when updated economic projections could guide the next move.

UK economy showed signs of losing momentum in July, with Composite PMI falling from 52.0 to 51.0.

EU Composite PMI climbed from 50.6 to 51.0—its highest level in 11 months.

USD is still on the backfoot. Fed is likely to remain on hold in July meeting, despite pressure from US President. US President has backed from his threat to remove Fed Chairman. However, the relationship can again turn sour after July meeting. Though US President has said that he will not remove Fed Chairman, he could quickly change his stance. USD could decline either due to rate cut or due to US President’s action on Fed Chairman.

Currency technical levels: USDINR: 86.25 (Supports), 86.60 (resistance),

EURINR:100.50(Support), 101.80/102.35 (Resistance)

GBPINR: Supports: 115.75 (supports), Resistance:117.30.

JPYINR: Resistance:59.45 Supports: 58.30/57.60 (support).