Indian Rupee pares early gains; ends 4 paise higher at 85.34/$

Indian Rupee pared early gains and ended slightly higher on Tuesday as the rise in dollar capped currency gains from easing geopolitical tensions. 

 

The domestic currency ended 4 paise higher at 85.34 after ending at 85.38 against the greenback on Friday, according to Bloomberg data. This comes after the currency opened 71 paise stronger at 84.67 per dollar, the best opening gains since April 30 this year. 

 

The reduction in tariffs and the consequent easing of the global trade war sent stocks and the dollar soaring. After rising nearly 1.5 per cent on Monday, the dollar index — a measure of the value of the US dollar relative to a basket of foreign currencies — was down 0.23 per cent at 101.55.

 

 

After two days of trade negotiations by the world’s biggest economies, a de-escalation of tariffs was announced with the US slashing duties on Chinese products to 30 per cent from 145 per cent and Beijing dropping its levy on most goods to 10 per cent.  

 

The risk-off sentiment also came after India proposed to impose retaliatory duties under the WTO (World Trade Organisation) norms against the US over American tariffs on steel and aluminium in the name of safeguard measures. "The safeguard measures would affect $7.6 billion imports into the US of the relevant products originating in India, on which the duty collection would be $1.91 billion," a WTO communication said.

 

Meanwhile, early gains in the currency came after India and Pakistan agreed to a full and immediate ceasefire on Saturday. After four days of fighting that risked transforming into an all-out war, the nuclear-armed rivals agreed to a full and immediate ceasefire.  

 

Prime Minister Narendra Modi on Monday evening laid out the three key tenets of India’s new doctrine to counter terrorism, stating that Operation Sindoor has set a new benchmark and is the “new normal”.

 

In commodities, crude oil prices rose as easing global trade tensions after the US and China agreed on a 90-day truce. Brent crude price was up 0.46 per cent to $65.26 per barrel, while WTI crude prices were higher by 0.61 per cent at 62.33, as of 3:40 PM.