Rupee Set To Deepen Losses As India Braces For Higher US Tariffs

The Indian rupee is poised to weaken past the psychologically important 87-per-dollar level on Wednesday after US President Donald Trump pointed to a likely 20%-25% tariff on Indian exports to the US, compounding pressure from sustained portfolio outflows.

The 1-month non-deliverable forward indicated the rupee will open in the 87.11-87.13 range versus the US dollar, its weakest level in four months. It had closed at 86.8150 on Tuesday.

India is preparing to face higher US tariffs, likely between 20% and 25%, on some of its exports, as it holds off on fresh trade concessions ahead of Washington's August 1 deadline, Reuters reported post market-hours on Tuesday.

Speaking to reporters, Trump pointed to similar level of tariffs but said that the deal has not been finalised yet.

New Delhi plans to resume the trade negotiations when a US delegation visits next month, aiming to finalise a comprehensive bilateral deal by September or October, a government official told Reuters.

Trump's remark will cause a "knee-jerk reaction," with traders likely reading it as a negative cue, a trader at a state-run bank said, adding that while India was expected to crack one of the first deals, it now appears to be a laggard.

Regional peers like Indonesia and Vietnam and the U.S.'s bigger trading partners like Japan and the European Union have already finalised trade deals with Washington in July.

It's "quite likely" the Reserve Bank of India may step in to support the rupee if the early losses extend, the trader said.

On the day, the dollar index was a tad lower at 98.7, while most Asian currencies nudged higher. The Federal Reserve's monetary policy decision is due during US market hours later in the day.

Key Indicators:

• One-month non-deliverable rupee forward at 87.27; onshore one-month forward premium at 13.25 paise
• Dollar index down 0.1% at 98.75
• Brent crude futures rises 0.2% to $72.6 per barrel
• Ten-year US note yield at 4.33%
• As per NSDL data, foreign investors sold a net $689 mln worth of Indian shares on July 28
• NSDL data shows foreign investors sold a net $66.4 mln worth of Indian bonds on July 28

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)