Rupee Opens Weaker Against Dollar As Trade Tensions Escalate

The rupee opened marginally weaker against the US dollar on Tuesday, after closing sharply lower in the previous session, weighed by ongoing global trade tensions and volatile market sentiment.

It opened at 85.88 per dollar, down 4 paise from Monday's close of 85.84. The rupee had fallen 60 paise yesterday, as equity markets across Asia and currencies came under heavy pressure.

The dollar index eased to 102.96, while Brent crude rebounded 1.12% to $64.93 per barrel after plunging to a four-year low on Monday. Global investors turned cautious after US President Donald Trump warned of additional tariffs on Chinese goods if Beijing does not withdraw its 34% duty on US exports. The threat of a full-blown trade war pushed investors to safe havens like the yen and Swiss franc, even as US 10-year yields rose to 4.17%.

“The rupee is expected to trade in a range of 85.60 to 86.20 today,” said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP. “Exporters may sell cash or nearby exports and look to hedge at 86.00 levels, while importers may wait for 85.00 to hedge further.”

“Yesterday's rebound in equities offered some relief to the rupee, and the Reserve Bank of India may have sold dollars to protect the currency,” said Bhansali. He added that over the next month, the rupee could broadly move between 84.50 and 86.50.

Exporters must hedge around 86 to protect costs, while importers should ideally wait for 85.25 levels, Bhansali advised.