Rupee Opens Sharply Lower Against US Dollar

The rupee opened sharply lower against the US dollar on Monday as fear on tariff outlook continued to fuel risk-off sentiment among investors. The rupee opened 39 paise lower at 87.27 against US dollar.

The Indian unit settled at 86.88 against the US dollar on Friday.

"The rupee's sharp depreciation is primarily driven by India's ongoing trade discussions with the U.S., where it has agreed to lower tariffs on select American products, including motorcycles (from 50% to 30%), and pledged to review other tariffs while increasing imports of US energy and defense equipment. Uncertainty surrounding these tariff adjustments and escalating trade tensions have further pressured the rupee," said Abhishek Goenka, founder and CEO, India Forex & Asset Managment Pvt.

The dollar index was trading near four-month low, which restricted losses in the rupee. The index fell to the lowest level since Nov. 5, 2024 on Friday, after number of new jobs fell in February, which was more than expected. New jobs increased 151,000 in February, compared to 160,000 jobs projection by Reuters' poll. Moreover, January's data was revised down to 125,000, compared to 143,000 reported earlier.

"The dollar index weakens further amid rising job cuts and trade deficit concerns. The index lost more than 3% in a week," said Kunal Sodhani, vice president, global trading centre, Shinhan Bank. "For USDINR, 86.70 acts as a resistance, while 87.34 a support."

Meanwhile, US Federal Reserve Chair Jerome Powell did not provide any fresh clues about the policy path from here on in his speech at the University of Chicago School of Business.

The index was trading flat at 103.87 as of 8:58 a.m., according to Bloomberg.

Oil prices hit the lowest level since September 2024 as weak data from China weighed on the demand outlook. The brent crude was trading 0.58% down at $69.95 a barrel as of 8:58 a.m.

"Given the factors, in the current scenario USDINR pair is expected to be in a range, with 86.80 holding as a strong support and 87.50 as a strong resistance," said Amit Pabari, managing director, CR Forex Advisors.