Rupee Opens Weaker Against US Dollar As Tariff Threats Loom
The rupee is likely to trade within the range of 85.20 to 85.80 on Friday.
The Indian rupee opened 8 paise weaker against the US dollar at 85.39 on Friday, compared to its previous close of 85.31 on Thursday.
Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, said "The rupee is likely to trade within the range of 85.20 to 85.80 today." Bhansali advised exporters to hedge near 86.00, while importers should consider hedging for the near term at 85.30 and below.
The dollar remained strong against the Euro and Yen following a solid Non-Farm Payroll Report and the passage of a significant tax bill by the US House of Representatives. "The dollar index rose to 97.07, while US yields increased to 4.33%," Bhansali noted.
He also mentioned the pressure on countries to finalise trade deals with the US, with the greenback rallying from over three-year lows after stronger-than-expected US jobs data delayed the timing for a US rate cut.
Attention is now focused on the July 9 deadline, when sweeping tariffs are expected to take effect on countries like Japan, which have yet to secure trade agreements. "Trump announced that the US will start sending letters on Friday to various countries specifying the tariffs they will face," Bhansali added.
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Brent oil prices remained steady at $68.58 per barrel amid solid jobs data and tariff uncertainty, with the market awaiting the OPEC+ meeting set to take place on July 6. "Today's trade was thinned by the US Independence Day holiday," Bhansali said. The US unemployment rate fell to 4.1% with the addition of 147,000 jobs, which is higher than expected, indicating the economy's resilience despite tariff-related turbulence.
Bhansali also commented on the Indian rupee's recent performance, noting that it had strengthened to 85.18, supported by flows from foreign portfolio investors and the absence of the Reserve Bank of India and oil companies from dollar buying, he said. "With strong NFPR data, the US dollar rose, reducing the chances of a Federal Reserve rate cut on July 25. Exporters may sell upticks in the dollar, while importers might buy on downticks."
