USD/INR advances Trump's fresh tariff threats dampen market mood
- The Indian Rupee opens on a weak note against the US Dollar amid dismal market sentiment.
- US President Trump stated a higher tariff blanket of 15%-20% on nations that have not struck a deal.
- The delay in the US-India trade deal has put the Indian Rupee on tenterhooks.
The Indian Rupee (INR) declines against the US Dollar (USD) during the European trading session on Friday. The USD/INR jumps to near 86.00 as the market sentiment turns cautious after United States (US) President Donald Trump mulls a higher tariff blanket for most of Washington’s trading partners.
US President Trump said in an interview with NBC News on Thursday that he is considering imposing 15%-20% blanket tariffs that have failed to strike a deal during the 90-day pause period, higher than 10% announced on so-called “Liberation Day” on April 2.
“We’re just going to say all of the remaining countries are going to pay, whether it’s 20% or 15%. We’ll work that out now,” Trump said.
President Trump's potential higher blanket tariff has led to a sharp decline in demand for riskier assets, such as the Indian Rupee. However, the US Dollar trades firmly near its two-week high, with the US Dollar Index (DXY) trading around 97.90.
The impact of dismal market sentiment is also visible in Indian equities, which have opened on a weak note. Nifty50 opens 0.3% lower at 25,300. Sensex30 skids below 83,000. The damage in Indian equities is partially done by India’s tech-giant, Tata Consultancy Services (TCS), which is down almost 2% after subdued results of the first quarter of FY 2025-2026.
Another reason behind souring market sentiment is Trump’s warning to send a letter to the European Union (EU), specifying tariff rates. However, EU officials said this week that they are aiming to reach a trade deal with Washington before the deadline of August 1. Meanwhile, Trump has imposed 35% tariffs on China, which will be separate from his sectoral levies, including automobiles, steel, copper, and aluminum.
Daily digest market movers: Indian Rupee declines on US-India trade deal uncertainty
- The Indian Rupee trades lower amid uncertainty surrounding the trade deal between the US and India. Both nations have yet to confirmed an agreement even as US President Trump said last week that he is expected to close a deal with India in 48 hours.
- However, New Delhi has stated that the Commerce Ministry team will soon head to Washington for another round of negotiations, Times of India (TOI) reported. “We are negotiating a complete deal. Whatever is finalised can be packaged as an interim deal, and talks on the rest will continue,” a senior government official said.
- The reason behind the delay in the US-India trade deal appears to be protectionist policies of New Delhi towards its agriculture and labor-intensive sectors, according to a report from NDTV.
- Meanwhile, growing expectations of a decline in the Oil price in the next few trading sessions due to a bigger-than-projected increase in oil production by the OPEC+ are expected to support the Indian Rupee. Currencies from nations that depend largely on Oil imports, such as the Indian Rupee, perform strongly in a lower Oil price environment.
- In the US, investors will shift focus to the US Consumer Price Index (CPI) data for June, which will be released on Tuesday. The inflation data will demonstrate the impact of sectoral and blanket tariffs imposed by US President Trump. Signs of price pressures accelerating would force traders to pare bets supporting interest rate cuts by the Federal Reserve (Fed) in the September meeting. In the policy meeting later this month, the Fed is certain to leave interest rates steady in the range of 4.25%-4.50%.
- On Wednesday, the Federal Open Market Committee (FOMC) minutes of the June 17-18 policy meeting showed that members expect monetary policy adjustments will be appropriate later this year if tariff-driven inflation proves to be “modest or temporary”.
Indian Rupee PRICE Today
The table below shows the percentage change of Indian Rupee (INR) against listed major currencies today. Indian Rupee was the weakest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | INR | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.14% | 0.33% | 0.48% | 0.33% | 0.16% | 0.15% | 0.04% | |
| EUR | -0.14% | 0.17% | 0.34% | 0.18% | 0.11% | 0.04% | -0.10% | |
| GBP | -0.33% | -0.17% | 0.20% | -0.01% | -0.08% | -0.15% | -0.31% | |
| JPY | -0.48% | -0.34% | -0.20% | -0.17% | -0.35% | -0.29% | -0.49% | |
| CAD | -0.33% | -0.18% | 0.00% | 0.17% | -0.12% | -0.13% | -0.30% | |
| AUD | -0.16% | -0.11% | 0.08% | 0.35% | 0.12% | 0.04% | -0.21% | |
| INR | -0.15% | -0.04% | 0.15% | 0.29% | 0.13% | -0.04% | -0.13% | |
| CHF | -0.04% | 0.10% | 0.31% | 0.49% | 0.30% | 0.21% | 0.13% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Indian Rupee from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent INR (base)/USD (quote).
Technical Analysis: USD/INR rebounds to near 86.00
USD/INR jumps to near 86.00 at open on Friday. The pair manages to return above the 20-day Exponential Moving Average (EMA), which trades around 85.90.
The 14-day Relative Strength Index (RSI) oscillates inside the 40.00-60.00 range, suggesting that the asset lacks momentum on either side.
Looking down, the May 27 low of 85.10 will act as key support for the major. On the upside, the June 24 low at 86.42 will be a critical hurdle for the pair.
Indian economy FAQs
The Indian economy has averaged a growth rate of 6.13% between 2006 and 2023, which makes it one of the fastest growing in the world. India’s high growth has attracted a lot of foreign investment. This includes Foreign Direct Investment (FDI) into physical projects and Foreign Indirect Investment (FII) by foreign funds into Indian financial markets. The greater the level of investment, the higher the demand for the Rupee (INR). Fluctuations in Dollar-demand from Indian importers also impact INR.
India has to import a great deal of its Oil and gasoline so the price of Oil can have a direct impact on the Rupee. Oil is mostly traded in US Dollars (USD) on international markets so if the price of Oil rises, aggregate demand for USD increases and Indian importers have to sell more Rupees to meet that demand, which is depreciative for the Rupee.
Inflation has a complex effect on the Rupee. Ultimately it indicates an increase in money supply which reduces the Rupee’s overall value. Yet if it rises above the Reserve Bank of India’s (RBI) 4% target, the RBI will raise interest rates to bring it down by reducing credit. Higher interest rates, especially real rates (the difference between interest rates and inflation) strengthen the Rupee. They make India a more profitable place for international investors to park their money. A fall in inflation can be supportive of the Rupee. At the same time lower interest rates can have a depreciatory effect on the Rupee.
India has run a trade deficit for most of its recent history, indicating its imports outweigh its exports. Since the majority of international trade takes place in US Dollars, there are times – due to seasonal demand or order glut – where the high volume of imports leads to significant US Dollar- demand. During these periods the Rupee can weaken as it is heavily sold to meet the demand for Dollars. When markets experience increased volatility, the demand for US Dollars can also shoot up with a similarly negative effect on the Rupee.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
