Rupee weakens tracking rise in dollar index ahead of Powell's speech

The rupee depreciated by 0.3% as the dollar strengthened, amid concerns over upcoming US tariffs and ahead of Jerome Powell's speech at Jackson Hole

The rupee depreciated by about 0.3 per cent on Friday, tracking a stronger dollar, amid renewed concerns over US tariffs on Indian goods, which are scheduled to take effect on August 27, said dealers.

 

The local currency settled at 87.53 per dollar against the previous close of 87.27.

 

It has weakened by 2.19 per cent against the greenback in the current calendar year so far.

 

“The rupee was tracking the dollar and importers were buying dollars because there is concern around the US tariff,” said a dealer at a state-owned bank.

 

The dollar index rose by 0.47 per cent to 98.72 ahead of the US Federal Reserve Chair Jeremy Powell’s speech at Jackson Hole Symposium scheduled later in the day.

 

 

Dollar index measures the strength of the greenback against a basket of six major currencies.

 

According to CME’s Fed watch tool, 80 per cent traders expect the US Federal Reserve to cut rates in September.

 

“The speech by Powell is expected to give firm cues to the market. The overall sentiment is down because of the tariff. The rupee is seen trading between 87.5 and 87.8 per dollar depending on the developments during the weekend,” said the treasury head at a private bank.

 

The rupee weakened by 0.02 per cent during the week. It had appreciated past 87 per dollar mark during the week on expectation that the US may ease its stance on additional 25 per cent tariffs, following Donald Trump's meetings with the Russian and Ukrainian presidents.

 

The additional 25 per cent tariff was imposed on India due to continued import of discounted Russian oil. This is viewed by the US as undermining Western sanctions against Moscow following its invasion of Ukraine.

 

Additionally, the central government has proposed a simplification and reduction of goods and services tax (GST) rates and this kept the rupee afloat during the week.

 

S&P Global's upgrade of the country's sovereign credit rating from 'BBB-' to 'BBB' also kept sentiment in the forex market high during the week.