Rupee falls 13 paise to close at 87.71 against U.S. dollar
Forex traders said rupee is trading in a narrow range amid extended weakness in the domestic equities and foreign fund outflows may also weigh on the domestic currency.
Moreover, President Donald Trump's aggressive move, which kicks in 21 days, threatens to raise total duties on select Indian exports to as high as 50% — making them among the most heavily taxed U.S. imports globally, further dented market sentiments.
At the interbank foreign exchange, the domestic unit opened at 87.56 and moved in a range of 87.52-87.75 during the day before settling at 87.71 (provisional), lower by 13 paise from its previous close.
On Thursday, the rupee settled 14 paise higher at 87.58 against the U.S. dollar.
"The Indian rupee declined on Friday on a recovery in the U.S. dollar and weak domestic equities. Uncertainty revolving around the trade war also pressurised the rupee. However, softness in crude oil prices prevented a sharp fall," Anuj Choudhary – Research Analyst, commodities and currencies, Mirae Asset Sharekhan, said.
Mr. Choudhary further noted, "Rupee is likely to trade with a negative bias amid ongoing trade war between India and U.S. as Mr. Trump hiked tariff on Indian imports to 50%.
"Extended weakness in the domestic equities and FII outflows may also weigh on the domestic currency. However, overall weakness in the U.S. dollar amid weakening labour market and rising odds of rate cut may support the rupee at lower levels."
On August 6, the United States announced an additional 25% tariff on all Indian imports, on top of an existing 25% duty, taking the total duty to 50% effective August 27.
Meanwhile, Brent crude prices rose 0.60% to $66.83 per barrel in futures trade.
The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.16% to 98.24.
On the domestic equity market front, Sensex tumbled 765.47 points to settle at 79,857.79, Nifty declined 232.85 points to 24,363.30.
Foreign institutional investors (FIIs) offloaded equities worth ₹4,997.19 crore on a net basis on Thursday, according to exchange data.
Meanwhile, President Trump has ruled out the possibility of trade negotiations with India, until the issue of tariffs is resolved.
"No, not until we get it resolved," Mr. Trump said in the Oval Office on Thursday in response to a question on whether he expects increased trade negotiations with India since he has announced 50% tariffs on the country.
Last week, Mr. Trump had announced a 25% reciprocal tariffs on India that came into effect from August 7.
The U.S. President also signed an executive order slapping an additional 25% levy on India for New Delhi's purchases of Russian oil, bringing the total duties to 50%, among the highest imposed by the U.S. on any country in the world.
The additional 25% duty will come into effect after 21 days or August 27.
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