FX – WEEKLY UPDATE :

Weekly SYNOPSIS: 25/04/2025

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Currency Map:

Currency Pairs	Week CLOSE	Prior week CLOSE	% change
USD/INR	85.39	85.38
EUR/INR	97.12	97.25	-0.13
GBP/INR	113.82	113.20	0.54
JPY/INR	59.61	59.96	-0.58

Brent Crude closed at USD 67 VS previous week close of USD 68. Gold closed at USD 3318. Nifty closed at 23851 vs prior month close of 24039. 10 Year G-SEC Yield is now at 6.46%.

Major developments: USDINR traded in the 85.03-85.67 range last week, and Rupee closed flat against USD w/w. EUR declined 0.13% w/w and GBP climbed 0.54% w/w against Rupee.

Indian benchmark Equity indices climbed 0.74% w/w. 10 Year G-SEC Yield closed at 6.46%.

1-year fwd premia is at 2.05% p.a.

FX reserves stood at USD 686 bn, as on Apr 18th. Reserves climbed US D 8.3 bn w/w.

In Apr, FII’S have sold 8751 Cr of Indian Equities and sold Rs 9775  cr of debt.

India’s foreign exchange reserves have risen to the highest-level since November last year to $686.14 billion. According to data from the Reserve Bank of India (RBI), the country’s forex kitty swelled by $8.31 billion for the period ended April 18, over the previous reporting week, which is the seventh consecutive advance. Gold reserves is at USD 84.57 bn USD.

Rupee was volatile swinging both ways in the 85-85.65 range. Likely conflict with Pak continues to weigh on investor minds, though there is no panic as yet.

Rupee’s upward trend will be intact till 86.65 is not broken. USD has bounced from 85 support level twice. Future movement will depend on USD index movement and how the border conflict fans out.

Indian PMI(mfrg)  rose sharply to 58.1 , up from Feb data of 56.3.

 

Hedging advise: Exports can be hedged on rally till 86.50 is not breached on the upside. Expect 85 to support USDINR pair on the downside.

Global developments: FX markets were relatively calm and US Equity indices are staging recovery despite tariff and economic uncertainties. The week started on a bad note for asset markets as US President hinted at removing Fed Chairman. However, his subsequent backtracking and conciliatory tone on China trade tariff helped USD and asset markets to fully recover.US Yields also softened with 10 year yield at 4.26%.

There are conflicting narratives on US- China trade talks. While US President claims to have spoken to Chinese President, China has asked US not to give misleading information. These added to further confusion. The conflicting narratives underscore the fog of uncertainty surrounding trade diplomacy, though market participants appear cautiously hopeful that both sides are seeking a path to de-escalation.

IMF has sharply revised down its global growth projections due to dramatic escalation in trade barriers and persistent policy uncertainty. Global GDP is now expected to grow just 2.8% in 2025 and 3.0% in 2026, down from 3.3% for both years in the January update, marking a cumulative 0.8 percentage point downgrade. India is expected to grow at 6.2%.

US economy showed clear signs of slowing in April, with S&P Global flash composite PMI falling from 53.5 to 51.2, its lowest level in 16 months. While manufacturing activity edged up slightly from 50.2 to 50.7, the services sector lost significant momentum, dropping from 54.4 to 51.4.  Early data signals a “marked slowing of business activity growth” at the start of Q2, with output rising at its weakest pace since December 2023. This implies a modest annualized GDP growth rate of around just 1.0%. At the same time, inflationary pressures are re-emerging. Companies reported a sharp uptick in input costs, led by tariff-related price increases and persistent wage pressures. In manufacturing, price increases reached their fastest pace in nearly two-and-a-half years. Services firms also raised their selling prices at the highest rate in over a year.

Eurozone economy showed signs of stagnation in April as its Composite PMI slipped to 50.1, down from 50.9 in March—a four-month low.

UK private sector contracted sharply in April, with the flash PMI Composite falling from 51.5 to 48.2, the lowest reading in 29 months. PMI Manufacturing dropped from 45.3 to 44.0, a 20-month low. PMI Services slipped from 52.5 to 48.9, the weakest in 27 months.

Japan’s flash PMI data for April signaled a return to growth in the private sector, with Composite PMI rising from 48.9 to 51.1. The recovery was driven primarily by a rebound in the services sector, where activity rose to 52.2 from 50.0. 

US GDP(advance) and employment data are important data releases in coming week.

Currency technical levels: USDINR: 85 (Supports), 85.67/86.15 (resistance),

EURINR:95.40/94(Support),

GBPINR: Supports: 112/111.50( supports), Resistance:114.30(Resistance).

JPYINR: Resistance:61.85, Supports: 58.40 (support).

Hedging advise: USDINR payables be hedged at 85. EUR receivables be covered as per comfort.  GBP receivables can be covered at 114+.

 

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