February 6, 2025
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Indian Rupee Set to Open Higher Amid Dollar Volatility and Trump’s Tariff Plans

The Indian rupee is poised to open stronger on Tuesday, trading around 86.36-86.38 per U.S. dollar in the 1-month non-deliverable forward market, slightly better than its previous close of 86.5675. This comes amid swings in the U.S. dollar index, which touched a two-week low of 107.86 in the Asian session before rebounding to 108.40. Market sentiment has been driven by contrasting reports on U.S. President Donald Trump’s tariff plans, with his administration signaling no immediate trade measures but hinting at tariffs on Canada and Mexico by February 1.

Currency markets remain volatile, with traders closely tracking the Chinese yuan and its correlation with the rupee. The offshore yuan rallied to 7.25 per dollar before stabilizing at 7.2850. Analysts suggest the rupee’s trajectory will align with the yuan’s movements, heavily influenced by Trump’s tariff policies. The 1-month USD/INR non-deliverable forward briefly dipped below 86.40 before recovering to 86.62, reflecting choppy trading conditions.

Investors are also keeping an eye on broader economic indicators, including Brent crude futures, which edged up 0.1% to $80.2 per barrel, and the 10-year U.S. Treasury yield at 4.54%. Meanwhile, foreign investors sold $418.9 million worth of Indian equities and purchased $61.7 million in bonds on January 17, according to NSDL data, reflecting cautious market sentiment ahead of further tariff announcements.

Pic Courtesy: google/ images are subject to copyright

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