Rupee expected to dip at open after Donald Trump mulls bigger tariff stick
The Indian rupee is poised to open lower on Friday, pressured by dollar's broad strength after U.S. President Donald Trump said he planned to impose blanket tariffs of 15% or 20% on most trade partners.
The one-month non-deliverable forward indicated the local currency opening in the 85.70-85.74 range, versus 85.6350 on Thursday.
"This slight up move (on dollar/rupee) does not change much in terms of the near-term direction," a currency trader at a bank said.
"Interbank will probably wait to see if the up move extends and then will look to fade it. Selling near to 85.90-86.00 has good risk reward, when you consider the recent price action."
Tariff headlines lifted the dollar index, putting pressure on Asian currencies. Trump's threat of raising blanket tariffs to 15–20% from the current 10% intensifies concerns about their economic impact.
Further, Trump moved to slap a 35% tariff on Canadian goods from August 1, deepening uncertainty around the direction of U.S. trade policy.
Throughout the week, Trump has rolled out a series of developments on the U.S. tariffs targeting trading partners, leaving investors to navigate the shifting landscape. So far, the reaction across Asian equities, forex, and rates markets has been largely muted.
The rupee itself has not been significantly affected, holding within an 85.50–86.00 range this week - a band that is "broadly in line with expectations," the currency trader said.
While the dollar index has risen 0.8% this week, the rally is modest in the context of its 11% decline over the first half of the year.
"Our baseline call remains that the dollar will show significantly reduced interest in tariff noise. Data remains a bigger driver, and the potential FX impact of next week's U.S. inflation figures still looks much bigger than trade news," ING Bank said in a note.
KEY INDICATORS:
** One-month non-deliverable rupee forward at 85.85; onshore one-month forward premium at 9 paise
** Dollar index up at 97.84
** Brent crude futures at $68.9 per barrel
** Ten-year U.S. note yield at 4.36%
** As per NSDL data, foreign investors bought a net $78.4 million worth of Indian shares on July 9
** NSDL data shows foreign investors sold a net $8.6 million worth of Indian bonds on July 9
