Rupee drops as traders await CPI print; ends near 86 mark on tariff fears

Indian Rupee today: The domestic currency closed 19 paise lower at 85.99 against the dollar on Monday, according to Bloomberg

The Indian Rupee remained under pressure for the second day as US President Donald Trump's tariff tensions continued to weigh on traders ahead of the retail inflation figures. 

 

The domestic currency closed 19 paise lower at 85.99 against the dollar on Monday, according to Bloomberg. The rupee has depreciated by 0.59 per cent against the greenback in the current financial year, and has witnessed 0.47 per cent depreciation in the current calendar year.

 

Rupee traded weak as the dollar index showed recovery, rising towards the 98 mark from recent lows of 96.50 over the past week, according to Jateen Trivedi, VP research analyst - commodity and currency at LKP Securities. 

 

 

  Additionally, a rebound in crude oil prices and slight weakness in domestic capital markets added pressure on the rupee, he said. "With these factors weighing on sentiment, the rupee remained on the back foot. The currency is expected to trade in a range of 85.45 to 86.25."

 

 

All eyes will be on the consumer price index (CPI)-based retail inflation data, that is likely to have cooled further in June, thus remaining below the 4 per cent target of the Reserve Bank of India (RBI) for a fifth consecutive month, giving the central bank wiggle room to focus on growth. 

 

In May, the retail inflation rate stood at a 75-month low of 2.82 per cent, while in June last year, it was 5.08 per cent.

 

Earlier in the day, the Wholesale Price Index (WPI) inflation dipped to -0.13 per cent in June, from 0.39 per cent in May, marking the first negative reading since the beginning of the year. The drop was largely driven by deflationary trends in food articles, fuel and power, and basic metals. 

 

Globally, traders remained cautious after Trump announced a 30 per cent tariff on imports from the European Union and Mexico, set to take effect from August 1. The EU postponed its 30 per cent retaliatory tariffs against the US to allow for further talks. The dollar index, a measure of the greenback against a basket of six major currencies, was up 0.03 per cent at 97.88. 

 

In commodities, crude oil prices extended gains as investors weighed the prospects of additional US sanctions on Russia, amid trade tensions. Brent crude price was up 0.91 per cent at $71.00 per barrel, while WTI crude prices were higher by 0.91 per cent at 69.07, as of 3:20 PM IST.