Rupee slides past 87/$ as Trump's tariff remarks, oil rally weigh

Indian Rupee today: The domestic currency opened 28 paise lower at 87.10 against the dollar on Wednesday, the lowest level since March 13 this year

The Indian currency weakned past the 87 mark on Wednesday as the country braces for higher-than-expected US tariffs and a surge in crude oil prices

 

The domestic currency opened 28 paise lower at 87.10 against the dollar on Wednesday, the lowest level since March 13 this year, according to Bloomberg. The local unit has depreciated 1.57 per cent so far this month and 1.78 per cent in this calendar year so far. 

 

The weakness in currency came after US President Donald Trump's statement that India may face a tariff rate of 20 to 25 per cent. He, however, cautioned that the final levy still was not finalised.   

 

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India is racing to finalise a trade deal with the US as the 1 August deadline approaches. Officials from both countries are engaged in continuous negotiations, although major disagreements remain unresolved.  The currency is likely to open weaker as markets react to Trump's statement that India faces tariffs of 20-25 per cent, significantly higher than what markets had anticipated, analysts said.  

 

The Rupee breached the key resistance level of 86.90, a zone where the Reserve Bank of India (RBI) was actively intervening yesterday, with the currency rebounding three times from that level, Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, said. Unless the RBI steps in again via the offshore Non-Deliverable Forward (NDF) market, the opening could remain under pressure, he said. 

 

Exporters are expected to continue holding onto their dollar earnings, while importers may remain active in the spot market for purchases until better hedging levels emerge, he said. 

 

Adding to the downward pressure are persistent foreign portfolio investor (FPI) outflows from Indian equities, with capital being redirected toward developed markets that are currently trading at record highs, analysts noted. 

 

FPIs have sold Indian equities for the seventh straight session in the secondary market, according to data from NSE. On Tuesday, FPIs offloaded stocks worth ₹4,636.60crore. In the last seven sessions, global funds have sold stocks worth ₹24271.98 crore. 

 

The dollar index is poised for the best month this year, with the measure of the greenback against a basket of six major currencies, down 0.16 per cent at 98.72. 

 

Meanwhile, crude oil prices rose to the highest in more than a month after Trump gave Russia 10 days to reach a Ukraine truce. Brent crude price was flat at 72.51 per barrel, while WTI crude prices were lower by 0.17 per cent at 69.09, as of 9:15 AM IST.