Rupee supported at open by dollar dip on US tariffs, fiscal concerns

Mint

2 days ago

MUMBAI, June 2 (Reuters) - The Indian rupee is expected to be supported at the open on Monday following a decline in the U.S. dollar due to tariff-related developments and fiscal concerns.
The 1-month non-deliverable forward indicated an open in the 85.52-85.54 range, versus 85.5775 in the previous session. The dollar index slipped 0.2% while Asian currencies were mixed on the day.
"Not much on the Asian front to guide the rupee today, with two-way flows likely to dominate in the 85.50–85.70 band," a currency trader at a Mumbai-based bank said.
According to the trader, interbank players are looking to sell dollar/rupee on up ticks, with stops placed around the 86 mark.
In recent sessions, the rupee has found support in the 85.60–85.70 zone, with bankers noting broad-based interest in selling dollars at those levels.
The dollar kicked off the week on the defensive against its major peers, weighed down by ongoing uncertainty over U.S. tariffs. President Donald Trump announced late Friday his intention to double duties on imported steel and aluminium to 50%, effective Wednesday.
This follows a U.S. trade court that initially blocked much of Trump's tariff plan, ruling that he had overstepped his authority. However, an appeals court later reinstated the bulk of those duties, reigniting market caution.
The dollar has further been weighed down by fiscal worries in recent weeks. The U.S. Senate will consider Trump's sweeping tax cut and spending bill, which will add an estimated $3.8 trillion to the $36.2 trillion in debt over the next decade.
"US growth and interest rates should continue to converge lower than in many other major economies", which should keep the dollar under pressure, ING Bank said.
"And there's still a sizeable risk that fiscal credibility issues take their toll on US assets this summer."
** One-month non-deliverable rupee forward at 85.64; onshore one-month forward premium at 13.25 paisa
** Dollar index down at 99.2
** Brent crude futures up 2.7% at $64.5 per barrel
** Ten-year U.S. note yield at 4.41%
** As per NSDL data, foreign investors sold a net $205.6mln worth of Indian shares on May 29
** NSDL data shows foreign investors bought a net $3,412.8mln worth of Indian bonds on May 29 (Reporting by Nimesh Vora; Editing by Eileen Soreng)