Rupee Set to Open Weaker as Trump Threatens 25% Tariff on Exports
The Indian rupee is expected to open weaker on Thursday, following a threat by U.S. President Donald Trump to impose a 25% tariff on Indian exports. This announcement has sent shockwaves through the financial markets, causing a decline in the value of the rupee against the US dollar.
The Reserve Bank of India (RBI) is likely to intervene in the foreign exchange market to stabilize the rupee, which is nearing its record low of 87.95. The 1-month NDF (Non-Deliverable Forward) contract suggests an opening range of 87.66-87.69, compared to the previous level of 87.42.
Trump’s tariff threat, which was announced on Tuesday, has created uncertainty in the market, leading to a decline in the value of the rupee. The Indian government has been in talks with the US administration to resolve the issue, but the threat of a 25% tariff has added to the uncertainty.
The rupee has been under pressure in recent weeks, due to a combination of factors including a widening trade deficit, a decline in foreign institutional investors’ (FIIs) holding in Indian equities, and a rise in crude oil prices. The currency has also been affected by the ongoing trade tensions between the US and China, which has led to a decline in global trade and a subsequent decline in the value of the rupee.
The RBI has been closely monitoring the situation and has taken steps to stabilize the rupee. The central bank has been intervening in the foreign exchange market to sell dollars and buy rupees, in an effort to prevent the currency from depreciating further.
In addition to the RBI’s intervention, the Indian government has also been taking steps to boost the country’s exports. The government has introduced a number of measures aimed at increasing exports, including a reduction in taxes and a simplification of the export procedure.
Despite these efforts, the rupee is likely to remain under pressure in the short term, due to the ongoing trade tensions and the threat of a 25% tariff on Indian exports. The currency is expected to trade in a range of 87.66-87.69 in the coming days, before stabilizing once the situation becomes clearer.
In conclusion, the rupee is likely to open weaker on Thursday, following Trump’s threat to impose a 25% tariff on Indian exports. The RBI is likely to intervene in the foreign exchange market to stabilize the rupee, which is nearing its record low. The currency is expected to trade in a range of 87.66-87.69 in the coming days, before stabilizing once the situation becomes clearer.
