CURRENCY OVERVIEW

The Rupee opened  weaker on Tuesday, bogged down by the softness in Asian peers and U.S. President Donald Trump's tariff warning to countries doing business with Iran.  On Monday, Trump saud countries that do business with Iran would be hit with a 25% tariff on U.S. trade, with Washington assessing its response to widespread protests in Iran.  Top export destinations for Iranian goods include India and China. There was no official documentation of the policy on the White House website, neither is there any information on whether it is aimed at all of Iran's trading partners. India is already grappling with 50% U.S. tariff - among the steepest, a backdrop that has contributed to persistent pressure on the rupee. The rupee is down about 0.3% so far this month, adding to 2025's nearly 5% decline, with traders saying that losses would likely have been larger if not for support from the Reserve Bank of India. The rupee hit an all-time low of 91.0750 last month, before recovering on the back of RBI intervention. The currency's Asian peers were mostly down on the day, with traders assessing the fallout of a criminal probe into Federal Reserve Chair Jerome Powell, a move analysts said threatens the central bank's independence and faith in U.S. assets. The dollar held to its losses on Tuesday after the Trump administration opened a criminal investigation into Federal Reserve Chair Jerome Powell, a move that threatens the central bank's independence and faith in U.S. assets.  The market reaction has been to sell the dollar and U.S. Treasuries, while the unease also prompted some investors to seek safety in gold. However, the selloff was much more measured than the one that followed Trump's sweeping tariffs last April. The euro was steady at $1.1663 in early Asia trade, having risen as much as 0.5% in the previous session, while sterling was similarly little changed at $1.3463, holding to Monday's 0.47% gain. The Swiss franc drew additional safety bids and was a touch stronger at 0.7974 per dollar, while the dollar index was last at 98.92, having clocked its worst day in three weeks in the previous session. U.S. Treasury yields eased slightly on Tuesday from the previous session's gains, with the benchmark 10-year yield last at 4.1713%. The two-year yield held near Monday's three-week high and stood at 3.5323%. The yen sank to a one-year low of 158.285 per dollar, with Japanese government bonds (JGBs) similarly under selling pressure. Oil prices edged higher on Tuesday, as heightened concerns surrounding Iran and potential supply disruptions outweighed the prospect of increased crude supply from Venezuela. Brent futures gained 28 cents, or 0.4% to $64.15 a barrel by 0101 GMT, hovering near a two-month high struck in the previous session. 

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The rupee closed modestly weaker on Wednesday as dollar demand from local corporates and on account of maturing positions in the non-deliverable forward (NDF) market blunted positive cues from gains in most regional peers. The rupee ended at 89.7850 per U.S. dollar, down about 0.1% on the day. Most Asian currencies edged higher but traders said local flow dynamics continued to dominate price action for the rupee, even though it has bounced back from the record-low levels hit last week. The maturity of positions in the NDF market also spurred dollar-buy bids at the daily reference rate, a trader at a Mumbai-based bank said. While price-action in the spot market was largely contained, dollar-rupee forward premiums declined sharply after the Reserve Bank of India announced it will conduct a 3-year $10 billion FX swap next month. The 1-month dollar rupee forward premium fell nearly 15 paisa and the 3-year forward premium was down over 50 paisa. The Japanese yen gained modestly against the U.S. dollar on Wednesday as traders focused on whether weakness in the Japanese currency will prompt officials in the country to intervene. Volumes are light ahead of Thursday’s Christmas Day holiday, when U.S. and many international markets will be closed. The Japanese currency was last up 0.25% on the day against the U.S. dollar at 155.84 per dollar. The dollar reached 157.77 yen on Friday. The dollar was otherwise mixed. The dollar index , which measures it against a basket of other currencies, including the yen and the euro, rose 0.07% to 97.96, with the euro down 0.14% at $1.1778. Sterling weakened 0.13% to $1.3498. The Australian dollar strengthened 0.07% to $0.6705 and the Canadian dollar gained 0.11% to C$1.367 per U.S. dollar. The U.S. currency has fallen this year as the Federal Reserve cuts rates, with more easing expected next year while analysts expect other central banks to have completed their rate reductions. Oil settled marginally lower on Wednesday, and prices were on course for their steepest annual decline since 2020 as investors weighed U.S. economic growth and assessed the risk of supply disruptions from Venezuela and Russia. Brent crude futures closed down 14 cents, or 0.2%, at $62.24 a barrel, while U.S. West Texas Intermediate crude eased 3 cents, or 0.05%, to $58.29

The rupee closed weaker on Friday , pressured by dollar demand linked to maturing non-deliverable forward positions and corporate hedging as global markets awaited a key U.S. Supreme Court ruling on trade tariffs. The currency closed at 90.1625 against the U.S. dollar, down 0.1% on the day but little changed week-on-week. Traders pointed to heightened dollar demand at the central bank's daily reference rate and hedging activity from companies, which weighed on the local unit on Friday. State-run banks were intermittently spotted offering dollars near the day's low for the rupee, which helped limit its losses, two traders said. The central bank stepped in firmly to shore up the currency earlier in the week, but traders said the rupee remains vulnerable without progress in U.S.-India trade talks, or a reversal in portfolio outflows. The dollar gained on Friday after data showed slower than expected U.S. jobs growth, suggesting the Federal Reserve could leave interest rates unchanged later this month. The dollar rose marginally across peer currencies as the data before paring those gains. The greenback was up 0.72% to 158 against the Japanese yen and was up 0.25% to 0.801 against the Swiss franc . The euro was down 0.22% against the dollar at $1.1633. The dollar index rose 0.27% to 99.14. Oil prices rose on Friday on concerns about potential disruption to Iran's output and uncertainty about supply from Venezuela. Brent futures were up 50 cents, or 0.8%, to $62.49 per barrel at 1359 GMT, while U.S. West Texas Intermediate (WTI) crude was up 51 cents, or 0.9%, to $58.27.