FX – WEEKLY UPDATE :

Weekly SYNOPSIS: 19/09/2025

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Currency Map:

Currency Pairs	WEEK CLOSE	PRIOR WEEK CLOSE	% change
USD/INR	88.72	88.16	0.63
EUR/INR	103.61	103.93	-0.30
GBP/INR	118.49	119.25	-0.63
JPY/INR	59.24	59.78	-0.90

Brent Crude closed at USD 70 VS previous week close of USD 66.50. Gold closed at USD 3760. Nifty closed at 24654 vs prior week close of 25327. 10 Year G-SEC Yield is now at 6.51%.

Major developments: USDINR traded in the 88.12-88.82 range last week, and Rupee  declined 56 ps against USD w/w. EUR declined 0.30% w/w and GBP declined 0.63% w/w against Rupee.

Indian benchmark Equity indices declined 2.6% w/w. 10 Year G-SEC Yield closed at 6.51%.

USDINR fwd premia was steady at 2.33% for 1 year as US-Indian Yield differentials widened.

FX reserves stood at USD 702.57 bn, as on Sep 19 th. Reserves declined by US D 396 mn w/w.

In Sept, FII’S have sold 8567 Cr of Indian Equities and have bought Rs 3600  cr of debt.

Rupee suffered another week of decline as US announced a steep H1 B fee of USD 1 lac. In addition, US also imposed 100% tariff on branded pharma imports. RBI sold USD in NDF market to halt a steeper fall. FII selling is unabated. FII’S have sold USD 15 bn this year. RBI has been reluctant to intervene aggressively, as it looks like they prefer a controlled decline in Rupee to compensate exporters. Real Value for Rupee against non USD currencies shows undervaluation and against USD, Rupee seems to be undervalued by around 2%. If there is any reversal in US tariff structure on Indian imports, Rupee could gain back part of its yearly loss. Rupee is already down 5% y/y.

India’s core infrastructure industries grew at their fastest pace in more than a year, with output rising 6.3% in August compared with a year earlier. Coal sector grew by 11.4%, fertiliser by 4.6%, and steel output grew by 14.2%.

Indian PMI (flash- composite) remains buoyant at 61.9. though there is a slight dip from prior month reading of 63.2. PMI(mfrg) dipped to 58.5 , while services activity index fell to 61.6 from 62.9.

OECD has upgraded Global growth forecast to 3.2% from June projection of 2.9%. In the U.S., GDP growth is projected to slow sharply, from 2.8% in 2024 to 1.8% in 2025 and 1.5% in 2026. China is also expected to lose momentum, easing from 4.9% in 2025 to 4.4% in 2026 as earlier stimulus fades and tariffs start to bite more fully. In the Eurozone, growth is forecast at 1.2% in 2025 and 1.0% in 2026. 

India is expected to grow by 6.7% in 2025.

Hedging advise: Export hedging can be done from now till 89.15

Global developments: USD rebounded and Yields climbed as strong economic data surprised investors and raised doubts whether Fed needs to cut rates aggressively. Growth, hiring, and investment all showed more strength than anticipated. The upgraded Q2 GDP print, resilient September PMIs, firmer jobless claims, and robust durable goods orders underscored economic resilience despite tariff headwinds.

Futures continue to price a high probability — 87.7% — of another cut in October, but bets on a December move have dropped to 65.4%, well below nearly 80% seen a week ago

US headline PCE rose 2.7% yoy, slightly up from July’s 2.6%. Core PCE held steady at 2.9% yoy. On the month, headline and core rose 0.3% mom and 0.2% mom, respectively, both in line with consensus. Personal income climbed 0.4% mom, above the 0.3% forecast. Personal spending gained 0.6% mom, also beating estimates of 0.5%.

US Q 2 GDP was revised upwards to 3.8% from earlier estimate of 3.3%. Weekly jobless claims data and durables order data highlighted strength of US economy with no evidence of tariffs derailing growth. USD surged as US yields surged and investors pared back expectations of 2 more rate cuts by Fed this year.

Federal Reserve Chair Jerome Powell on Tuesday signaled a cautious approach to future interest rate cuts. Powell noted that there are risks to both of the Fed’s goals of seeking maximum employment and stable prices. But with the unemployment rate rising, he noted, the Fed agreed to cut its key rate last week. Yet he did not signal any further cuts on the horizon. If the Fed were to cut rates “too aggressively,” Powell said, “we could leave the inflation job unfinished and need to reverse course later” and raise rates. But if the Fed keeps its rate too high for too long, “the labor market could soften unnecessarily,” he added.

US NFP is key data event for the week.

Currency technical levels: USDINR: 88.45/88.35 (Supports), 89.15 (resistance),

EURINR:101.10(Support), 104.20/105 (Resistance)

GBPINR: Supports: 116.90 (supports), Resistance:120.70

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