Rupee Closes Stronger Against Dollar After Trump Tariffs Impact
The currency pared losses and closed 7 paise stronger at 85.44 against the US dollar.
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The Indian rupee closed stronger against the US dollar on Thursday after erasing early losses triggered by fresh tariffs imposed by US President Donald Trump. The local currency, which opened sharply lower following the tariff announcement, recovered as market sentiment stabilised.
The rupee strengthened 7 paise to close at 85.44 against the US dollar, according to Bloomberg data. It had opened at 85.75, marking its biggest opening drop since March 10, before recovering. On Wednesday, the currency ended at 85.51 per dollar.
Oil prices declined after Trump announced steep tariffs on major trading partners, including China and the European Union, raising concerns over global economic growth. However, energy products, including oil and natural gas, were exempted from the tariffs. Brent crude fell as much as 3.2% to $72.52 per barrel, tracking a broader market selloff, according to data from Bloomberg.
"There is considerable uncertainty around implementation and how other countries will retaliate," Abhishek Goenka, Founder & CEO of India Forex & Asset Management, said.
The US has introduced reciprocal tariffs that are significantly higher than market expectations. A minimum 10% tariff will be applied to all exports to the US, with additional duties imposed on 60 countries. The baseline tariffs take effect from April 5, while higher tariffs on India, China, and the European Union will come into force from April 9.
"These reciprocal tariffs have been arrived at considering not just the duties imposed by other countries on the US but also taking into account currency manipulation and trade barriers," he said.
For India, the Trump administration has determined that the tariff rate, including these factors, should be 52%, according to Goenka.
Trump, addressing an event titled ‘Liberation Day’ at the White House, said the tariffs were necessary to counter “unfair trade policies” that had hurt the US economy. He blamed trade deficits for weakening domestic manufacturing and disrupting supply chains, calling the latest round of levies his strongest action yet against an “imbalanced” global trade system.
