IGI Logo

 A rally in the Indian rupee that has lifted the currency to a three-month high is likely to pause on Wednesday in the countdown to a planned tariff announcement by the United States.

The 1-month non-deliverable forward indicated that the rupee will open at 85.60-85.64 to the U.S. dollar compared with 85.47 on Friday.

India money markets were shut on Monday and Tuesday.

In March, the rupee posted its best monthly performance in more than six years, spurred by foreign portfolio and other inflows, coupled with a scaling back of bearish wagers.

Foreign investors purchased nearly $4 billion of Indian equities and bonds, a significant reversal from approximately $12 billion in outflows seen in January and February.

The rupee is heading into President Donald Trump's "big moment" with a lot of positive momentum, a currency trader at a Mumbai-based bank said.

"Tomorrow's market direction will hinge on the overall response to Trump's announcement," he said, adding that exporters will step in if there is a significant USD/INR upward correction.

ALL ABOUT TRUMP'S TARIFFS

In recent weeks, the focus has squarely been on a new round of reciprocal levies, which the White House is due to announce on Wednesday at 2000 GMT and are expected to take effect immediately.

The Washington Post reported that Trump's aides are considering a plan that would raise duties on products by about 20% from nearly every country.

"The range of outcomes is wide and includes considerable risk of tariff increases—particularly an aggressive reciprocal tariff," Goldman Sachs said in a note.

KEY INDICATORS:

** One-month non-deliverable rupee forward at 85.88; onshore one-month forward premium at 22.33 paise

** Dollar index at 104.18

** Brent crude futures up 0.1% at $74.6 per barrel

** Ten-year U.S. note yield at 4.2%

** As per NSDL data, foreign investors bought a net $946.9 million worth of Indian shares on March 27

** NSDL data shows foreign investors sold a net $100.9 million worth of Indian bonds on March 27