FX – WEEKLY UPDATE :

Weekly SYNOPSIS: 29/08/2025

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Currency Map:

Currency Pairs	WEEK CLOSE	PRIOR WEEK CLOSE	% change
USD/INR	88.18	87.50	0.78
EUR/INR	102.47	101.34	1.01
GBP/INR	118.57	117.13	1.23
JPY/INR	59.76	58.84	1.56

Brent Crude closed at USD 67.50 VS previous week close of USD 67.50. Gold closed at USD 3448. Nifty closed at 24426 vs prior week close of 24870. 10 Year G-SEC Yield is now at 6.58%.

Major developments: USDINR traded in the 87.33-88.30 range last week, and Rupee  declined 68 ps against USD w/w. EUR climbed 1% w/w and GBP declined 1.23% w/w against Rupee.

Indian benchmark Equity indices declined 1.82% w/w. 10 Year G-SEC Yield closed at 6.58%.

1-year fwd premia is at 2.21% p.a. G-sec yields continued to climb.

FX reserves stood at USD 690.70 bn, as on Aug 22 nd. Reserves declined US D 4.38 bn w/w.

In Aug, FII’S have sold 28840 Cr of Indian Equities and have bought Rs 6862  cr of debt.

Indian Rupee broke through 88 levels as RBI stepped aside to allow the fall. Perhaps, RBI’S thinking is to allow some fall to help exports. Rupee declined 57 ps m/m to close at 88.18 as against July close of 87.61. US imposed extra tariff of 25% on Indian imports from Aug 27 th. India has remained firm in its approach towards continued Oil purchases from Russia and has also drawn a red line on agri and dairy imports in trade negotiations. Commerce Minister has assured that affected sectors will be assisted in finding new markets.

Q1 GDP growth beat estimates, recording 7.8%, best growth rate in 5 quarters. In Q4 FY24, GDP climbed 7.4%. In Q1 FY 24, GDP grew by 6.5%. Services sector grew by 9.3%, mfrg climbed 7.7%, agri sector grew by 3.7%, private consumption grew by 7%, Gross fixed capital formation – a proxy for investments – increased by 7.8 per cent, down from 9.4 per cent in the previous quarter, but higher than 6.7 per cent in April-June 2024. 

USDINR fwd premia has edged higher to 2.2% as 10 year yield climbed to 6.58%. Indian Equities continued to decline as FII’S sold relentlessly for investment in other Asian markets.

Hedging advise: Imports can be hedged till 87.80 is not broken and exports hedging can be deferred till 88.60/89 is touched.

Global developments: US GDP (second-estimate) surprised on the upside, with a gain of 3.3%. This was revised higher from 3.0% in the preliminary estimate.  Core PCE inflation rose 0.3% m/m, pushing the year-ago measures to 2.9% – a five-month high. This puts focus on US employment data in coming week as that will determine Fed action in Sept. US President is continuing to pressurise Fed to toe his line. He fired a Fed member and is attempting to replace the board with members who are in alignment with his thinking.

A U.S. appeals court ruled on Friday that most of President Donald Trump’s global tariffs were illegal, finding he exceeded his authority when imposing them. However, it will continue till Oct till the top court gives its ruling.

Gold gained momentum for its role as a refuge in times of deepening political and institutional turmoil in the US.

Currency technical levels: USDINR: 87.80/87.50 (Supports), 88.60/89 (resistance),

EURINR:102.45(Support), 103.35 (Resistance)

GBPINR: Supports: 118.30 (supports), Resistance:120.70

JPYINR: Resistance:60.25/60.80 Supports: 59.65/58.75 (support).