The rupee appreciated 14 paise to 87.95 against the US dollar in early trade on Tuesday. This positive movement tracked a strong trend in domestic equities. However, concerns over US tariffs on India weighed on the domestic unit. Forex traders noted these pressures could persist.
Traders said the rupee might remain under pressure due to global uncertainty. Worries over US tariffs add to the challenges. Recent record lows have prompted possible RBI intervention to cap losses. Such actions aim to stabilize the currency.
At the interbank foreign exchange market, the rupee opened at 87.98. It then touched 87.95, showing a gain from its previous close. On Friday, it hit an intraday low of 88.38 but recovered. It ended 3 paise higher at 88.09 against the dollar.
The unit had recorded its all-time low closing level of 88.15 on September 2. The forex market was closed on Monday for a public holiday. Maharashtra declared Eid-e-Milad on September 8 instead of September 5. This closure paused trading activities.
Meanwhile, the dollar index was trading at 97.40, down 0.05 percent. Weak US NFPR data and a rising unemployment rate influenced this. The rate reached 4.3 percent, paving the way for a Fed rate cut. Some predict a 50 bps cut on September 17.
Amit Pabari of CR Forex Advisors highlighted upcoming US inflation data. The CPI for August is due on Thursday. A softer reading could strengthen the case for larger rate cuts. This would keep the dollar under pressure.
An upside surprise in inflation could complicate the Fed’s path. It might inject fresh volatility into the dollar’s trajectory. Such developments are closely watched by market participants. They impact global currency movements.
Brent crude futures traded 0.53 percent higher at $66.37 per barrel. Softer US data and potential Fed shifts might support the rupee. However, India’s trade and tariff headwinds may cap any recovery. Upside risks remain intact.
Domestic equities showed strong performance. The Sensex rallied 366.87 points to 81,154.17 in early trade. The Nifty climbed 101.35 points to 24,874.50. This positive trend provided a boost to the rupee.
Foreign Institutional Investors offloaded equities worth Rs 2,170.35 crore on Monday. This selling activity reflects ongoing cautious sentiment. It contrasts with the early trade gains seen in indices.
White House trade advisor Peter Navarro issued a fresh outburst. He said India must come around on trade negotiations with the US. Otherwise, it won’t end well for Delhi. His comments add to tariff concerns.
Navarro described India as the ‘Maharajah’ of tariffs. He mentioned the Indian government takes offence to him. Such statements heighten tensions between the two nations. They influence market perceptions and currency stability.
The interplay between domestic equities and external pressures shapes the rupee’s path. Investor sentiment remains mixed amid these developments. Monitoring key data and policy decisions is essential. The currency market stays alert to changes.
Global factors and local interventions create a complex landscape. Traders navigate uncertainty with careful analysis. Each data release can shift trajectories quickly. Staying informed is crucial for market participants.