Rupee steady at open after hitting fresh closing low amid fresh tariff

The Indian Rupee trades at its lowest levels since February this year, and depreciated 2.14 per cent in July, the highest monthly fall since September 2023

The Indian Rupee opened flat on Friday, after hitting a record low in the previous session, as falling oil prices offset gains in the US dollar amid renewed tariff concerns.

 

The domestic currency opened flat at 87.60 against the dollar on Friday but eased towards 2 paise in opening deals, according to Bloomberg. The currency trades at its lowest levels since February this year, and depreciated 2.14 per cent in July, the highest the highest monthly fall since September 2023. 

 

The Indian rupee touched a low of 87.75 on Thursday but recovered to close at 87.5950, as the Reserve Bank of India (RBI) intervened to stabilise the market, analysts said. 

 

 

The central bank appeared active in the offshore non-deliverable forwards (NDF) market, helping limit the rupee’s fall after it was expected to open flat, according to Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP. 

 

 

  The latest US tariff tweak includes a base levy of 10 per cent and 15 per cent or higher rates for countries with trade surpluses with the US. However, Canada was hit with a 35 per cent tariff, while Mexico's was delayed by another 90 days. These new rates are set to take effect after midnight on August 7. 

 

This episode came a day after Trump imposed a 25 per cent levy on Indian goods, and threatened further penalties for its imports of Russian energy. However, India remains firm on its Russia ties with a broad consensus on avoiding retaliation and resorting to negotiations.

 

The dollar index, the measure of the greenback against a basket of six major currencies, was up 0.09 per cent at 100.05. 

 

Back home, the central government's fiscal deficit stood at 17.9 per cent of the full-year target at the end of June. It was at 8.4 per cent of the Budget Estimates (BE) of 2024-25 in the first three months of the previous financial year. This marks a sharp rise compared to 8.4 per cent in the same period last year, driven by slower tax collections and higher interest payments, analysts said.   ALSO READ: India can convert trade deal issue with US into 'win-win': Raghuram Rajan 

If the RBI continues to manage volatility, the rupee could strengthen toward the 87.00 level, according to Bhansali. However, sustained central bank presence will be key to keeping the currency within a narrow range. "Exporters are advised to hedge their receivables, while importers may consider buying on a spot basis and waiting for opportunities to hedge below 87.00."

 

In commodities, crude oil prices fell as traders digested the impact of new, higher US tariffs. Brent crude price was down 0.97 per cent at 72.53 per barrel, while WTI crude prices were higher by 0.09 per cent at 69.32, as of 9:20 AM IST. 

  ALSO READ: India can convert trade deal issue with US into 'win-win': Raghuram Rajan