On Monday, the rupee had initially strengthened following the US Supreme Court’s ruling on tariffs, touching an intraday high of 90.6750. However, it ran into familiar pressures flagged by market participants, including importer demand for immediate dollar payments and short-term hedging, as well as a broader reluctance to sell the US currency.
“The imbalance in flows, coupled with expectations of sustained dollar demand through the week, pushed the rupee back toward the weaker side of its recent range,” India Forex Advisors noted, adding that domestic flows had “reasserted themselves.” Hedging activity ahead of NDF maturities also restrained the rupee’s gains.
Traders will watch closely to see whether the 91-per-dollar mark is breached, a level where the Reserve Bank of India has historically intervened to support the currency.
Regional and global factors
Asian currencies and equities slipped on Tuesday, following Wall Street losses amid renewed uncertainty over US trade policy. US President Donald Trump warned countries against backtracking on trade deals after the Supreme Court struck down his emergency tariffs.
US Treasury yields fell alongside the equity selloff, with the 10-year yield dropping to near 4.02%. Despite the decline in yields, Asian currencies including the rupee remained under pressure amid heightened risk aversion.
–With agencies inputs
