FX – WEEKLY UPDATE :

Weekly SYNOPSIS: 13/06/2025

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Currency Map:

Currency Pairs	WEEK CLOSE	PRIOR WEEK CLOSE	% change
USD/INR	86.08	85.68	0.46
EUR/INR	99.31	98.11	1.22
GBP/INR	116.55	116.25	0.25
JPY/INR	59.99	59.55	0.73

Brent Crude closed at USD 74.25 VS previous week close of USD 66.50. Gold closed at USD 3342. Nifty closed at 24719 vs prior month close of 24750. 10 Year G-SEC Yield is now at 6.29%.

Major developments: USDINR traded in the 85.42-86.25 range last week, and Rupee declined 0.46% against USD w/w. EUR climbed 1.22% w/w and GBP climbed 0.25% w/w against Rupee.

Indian benchmark Equity indices declined 0.12% w/w. 10 Year G-SEC Yield closed at 6.29%.

1-year fwd premia is at 1.88% p.a.

FX reserves stood at USD 696.65 bn, as on June 13 th. Reserves climbed US D 5.17 bn w/w.

In June, FII’S have sold Rs 397 Cr of Indian Equities and sold Rs 1322  cr of debt.

Geo political tensions intensified as Israel and Iran traded missile attacks on each other. Crude rallied 8% and triggered 54 ps fall in Rupee on Friday. Higher Oil prices could expand trade deficit.

Indian May CPI inflation eased to 2.82%. In April, CPI was at 3.16%. Food inflation, a key metric, hit 0.99% in May, sharply below the 1.78% of April. Vegetable inflation dipped by 13.7% in April, with cereal price growth up by 4.77% in May. April IIP growth rate for  is 2.7 percent which was 3.0 percent (Quick Estimate) in the month of March 2025. The growth rates of the three sectors, Mining, Manufacturing and Electricity for the month of April 2025 are (-)0.2 percent, 3.4 percent and 1.1 percent respectively.

Rupee declined steeply on Friday and closed above 86 levels. Though USD is still declining against majors, spike in Crude prices weighed down on Rupee. If Geopolitical tensions ease and Crude softens again, Rupee could retrace its losses. It could trade above 85.40 and could potentially weaken to 86.35/86.65 levels. However, we still expect monthly average at around 86.25 levels in this fiscal year.

Hedging advise: Imports can be hedged till 85.40 is not broken.

Global developments:  : Geo political tensions intensified as Israel and Iran traded missile attacks on each other. Crude rallied 8% and Gold soared. Euro climbed as ECB hinted at rate pause. US CPI and employment data were on the softer side, raising hopes for Sept rate cut by Fed.

U.S. and China reached a tentative ‘framework’ of a trade deal on Wednesday. The U.S. administration also signalled an openness to extend the 90-day pause on reciprocal tariffs for some countries.

US President said that he will set tariffs for various countries in next few weeks. However, he also said that he could extend deadline for countries negotiating in good faith.

Fed is meeting this week and will maintain status quo. Fed’s economic and inflation projections and Fed Chair’s comments will be watched for nuances on Fed’s monetary thinking.

US headline CPI rose just 0.1% mom, below consensus of 0.2% mom. Core CPI, which excludes food and energy, also surprised to the downside with a 0.1% mom rise against an expected 0.3% mom. On an annual basis, headline CPI rose slightly from 2.3% yoy to 2.4% yoy, still undershooting the forecasted 2.5% yoy. Core CPI held steady at 2.8% yoy, also missing expectations of 2.9% yoy.

ECB Chief Economist emphasized that last week’s rate cut was a strategic step to ensure inflation remains on track toward the 2% target over the medium term. ECB Governing Council member signaled openness to further interest rate cuts, suggesting that while ECB has already delivered significant easing, “fine-tuning” adjustments could be needed depending on how the economy evolves.

BOE and BOJ meetings are also other important events for the week.

Currency technical levels: USDINR: 85.70/85.45 (Supports), 86.35 (resistance),

EURINR:96.80/96.10(Support), 100 (Resistance)

GBPINR: Supports: 114.60( supports), Resistance:117-118(Resistance).

JPYINR: Resistance:61 Supports: 58.70/57.20 (support).

Hedging advise: USDINR receivables be hedged on rally to 86.35/86.60 and payables be hedged at 85.70/85.55.