Rupee Opens Higher Even As 50% Tariff On India Comes Into Effect

The Indian rupee opened stronger against the U.S. dollar on Thursday, defying pressure from the newly implemented 50% tariff on Indian goods by the Trump administration. The currency opened 17 paise higher at 87.51 per dollar, compared to Tuesday’s close of 87.68.

The tariff, which came into effect at 9:31 a.m. IST, includes a punitive 25% levy specifically targeting India’s oil imports from Russia, a move New Delhi has described as “unjustified.” Despite the geopolitical headwinds, the rupee showed resilience, supported by the Reserve Bank of India’s intervention.

"RBI again protected the rupee from crossing its all-time low by selling dollars at 87.80 on Tuesday," said Anil Kumar Bhansali, Head of Treasurey and Executive Director at Finrex Treasury Advisory LLP. The yield on Indian's benchmark 10-year bond opened flat at 6.60% indicating cautious optimism in the debt market.

Globally, the dollar index slipped to 98.08, while the U.S. 10-year Treasury yield fell to 4.22%. The decline followed US President Trump's unprecedented decision to fire Federal Reserve Governor Lisa Cook, raising fresh concerns over the central bank's independence.

"The unpredictable actions of the Trump Administration and the prospect of a more dovish FED have kept the dollar in check," Bhansali added.

He further added that, "Exporters are expected to sell dollar at 87.80 for hedging while importers may buy the same on all dips for near term imports payments as uncertainty continues on the US treasury applying additional tariffs on India by 25% which came into effect yesterday."