By Nimesh Vora
MUMBAI (Reuters) – The Indian rupee is poised to open lower on Friday, after the dollar index surged on back of U.S. President Donald Trump’s latest tariff comments.
The 1-month non-deliverable forward indicated that the rupee will open at 87.30-87.32 to the U.S. dollar, compared with its previous close of 87.20.
Trump on Thursday said that his proposed 25% tariffs on Mexican and Canadian goods will go into effect March 4, a day after he said that the levies could take effect on April 2.
Further, China will be charged an additional 10% tariff on that day, Trump said in a post on his Truth Social platform.
With Trump tariff worries resurfacing, it is “to be expected” that there “will be a further” bias to buy the dollar/rupee pair, a currency trader at a bank said.
“The key level right now would be 87.40 after what happened yesterday.”
The rupee had dropped to near 87.40 on Thursday before the Reserve Bank of India intervened to arrest the decline. The intervention was “quite purposeful”, the currency trader said.
U.S. equities plunged on Thursday, and the dollar index had its best day in more than two months.
“Tariffs are back in the crosshairs, and a market that had reduced its sensitivity to recent tariff headlines has had to reconsider that reaction function,” said Chris Weston, head of research at Melbourne-based broker Pepperstone.
The important question for the FX market are just a negotiating tactic or whether they will actually be implemented, according to analysts.
Trump had previously provided a last-minute reprieve from tariffs to Canada and Mexico.
Meanwhile, the RBI’s $10 billion dollar-rupee swap, due to be conducted on Friday, is expected to witness robust demand.
KEY INDICATORS:
** One-month non-deliverable rupee forward at 87.52; onshore one-month forward premium at 19.50 paisa
** Dollar index at 107.32
** Brent crude futures down 0.3% at $73.8 per barrel
** Ten-year U.S. note yield at 4.23%
** As per NSDL data, foreign investors sold a net $325.7 million worth of Indian shares on February 25
** NSDL data shows foreign investors bought a net $6.5 million worth of Indian bonds on February 25
(Reporting by Nimesh Vora; Editing by Varun H K)
Disclaimer: This report is auto generated from the Reuters news service. ThePrint holds no responsibility for its content.
