Rupee trims early gains as Trump hikes tariffs to 50%; opens at 87.68/$

Indian rupee today: The domestic currency opened 5 paise higher at 87.68 against the dollar on Thursday

The Indian rupee opened higher on Thursday despite US President Donald Trump doubling India tariffs to 50 per cent over its purchases of Russian energy.  

 

The domestic currency opened 5 paise higher at 87.68 against the dollar on Thursday, according to Bloomberg. However, in the initial trades, the currency pared its gains to fall to the 87.73 mark. 

 

The US had already announced a 25 per cent tariff on Indian imports, set to take effect from August 7. The additional 25 per cent duty will apply to shipments arriving after a 21-day window, from August 28 onwards. India responded by condemning the tariff hike, calling the US decision "unfair, unjustified and unreasonable." 

 

 

The Rupee is expected to open slightly higher, as markets took comfort in Trump raising tariffs by just 25 basis points on Indian imports over Russian oil purchases, lower than feared, Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP. 

 

However, any hike is likely to weigh on Indian exports to the US, Bhansali said. Meanwhile, the Reserve Bank of India (RBI) continued to support the currency on Tuesday and is expected to do so today as well, he added. "Any dip in the rupee may present a good hedging opportunity for importers with near-term payables. However, for broader hedging, a wait-and-watch approach is advised."

 

On Wednesday, the RBI's Monetary Policy Committee (MPC) decided to keep the benchmark repo rate unchanged at 5.5 per cent. The Indian rupee got some support from the central bank as it kept the Repo rate steady, Kunal Sodhani, vice president at Shinhan Bank. 

 

However, the impending higher tariffs on shipments to the US are likely to keep the rupee under pressure, Sodhani said. "For USDINR, 87.50 to act as a base and 87.95 first important resistance, followed by 88.20."

 

The recent volatility in the rupee is relatively modest, especially when compared to sharper fluctuations seen in major currencies like the US dollar, RBI Governor Sanjay Malhotra said at the post-monetary policy press conference.

 

The dollar index, the measure of the greenback against a basket of six major currencies, was down 0.07 per cent at 98.24.

 

In commodities, crude oil prices rose with the Russian crude buyer sanctions in focus. Brent crude price was up 0.88 per cent at 67.48 per barrel, while WTI crude prices were higher by 1.03 per cent at 65.01, as of 9:15 AM IST.