MUMBAI, Jan 28 (Reuters) – The Indian rupee weakened on Tuesday, as dampened global risk appetite and renewed concerns about trade tariffs under U.S. President Donald Trump kept Asian currencies on the defensive, while a broader risk-off sentiment dominated global markets.
The rupee was at 86.53 against the U.S. dollar as of 11:40 a.m. IST, down 0.2% on the day.
Asian currencies were broadly weaker as well, although many regional markets shut for local holidays. The offshore Chinese yuan was down 0.3% at 7.27.
Trump said on Monday he plans to impose tariffs on imported computer chips, pharmaceuticals and steel in an effort to return production of such essential goods to the U.S.
“Malaysia, Singapore and India stand out as the economies within Emerging Asia where these critical products might account for significant proportions of their shipments to the U.S., followed by Taiwan, the Philippines, Thailand and Korea,” Barclays said in a note.
The Financial Times reported that Trump’s pick for U.S. Treasury Secretary, Scott Bessent, has been pushing for new universal tariffs on U.S. imports starting at 2.5% and rising gradually by the same amount each month.
In response to the report, Trump said that he wishes to enact universal tariffs that are much bigger than 2.5%.
Currency markets are expected to remain acutely sensitive to trade policy-related developments.
Meanwhile, broader risk aversion also dominated market sentiment following a selloff in U.S. tech stocks on Monday.
The rupee has declined due to weak global cues and is expected to hover between 86.30 and 86.80 in the near term, said Dilip Parmar, a foreign exchange research analyst at HDFC Securities.
Meanwhile, dollar-rupee forward premiums slumped after the Reserve Bank of India announced steps to inject liquidity into the banking system.
The 1-year dollar-rupee implied yield touched an over-one-month low of 2.12% in early trading before paring some losses.
(Reporting by Jaspreet Kalra; Editing by Savio D’Souza)
