Indian Rupee Falls Amid US Trade Tensions

The Indian Rupee (INR) dropped against the US Dollar (USD) during the European trading session on Friday. The USD/INR rate climbed close to 86.00 as investors became cautious following news that US President Donald Trump is considering higher tariffs on many trading partners.

Trump Proposes Higher Tariffs

President Trump mentioned in an interview that he might impose 15%-20% tariffs on countries that failed to reach a trade agreement during the recent 90-day pause period. This is a rise from the earlier 10% tariffs announced on April 2. Trump stated, "All of the remaining countries are going to pay, whether it’s 20% or 15%."

This announcement caused a drop in demand for riskier assets, including the Indian Rupee. Meanwhile, the US Dollar remained strong, with the US Dollar Index near a two-week high of 97.90.

Impact on Indian Markets

The uncertainty has also affected Indian stock markets. The Nifty50 index opened 0.3% lower at 25,300, and the Sensex30 slipped below 83,000. Tata Consultancy Services (TCS), India’s tech giant, fell nearly 2% after reporting weaker quarterly results, adding to the negative sentiment.

Trade talks between the US and India are also causing uncertainty. Although President Trump said last week that a deal with India might be finalised soon, no agreement has yet been confirmed. India is reportedly protecting its agriculture and labour sectors, delaying the deal.

Oil Prices and Future Outlook

There is some hope for the Rupee as oil prices might drop soon due to increased production by OPEC+, which usually supports currencies of oil-importing countries like India.

Investors now await the US Consumer Price Index (CPI) data release on Tuesday. This inflation data could influence expectations about future US interest rate decisions and further affect currency movements.

Conclusion

The Indian Rupee is currently under pressure from global trade tensions and uncertain US-India negotiations. While oil price changes may provide some relief, the overall cautious market mood keeps the Rupee weak against the US Dollar. Investors will closely watch upcoming US inflation data for further clues on market direction.

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