Indian Rupee Gains Against US Dollar Despite Tariff Worries

New Delhi- The Indian rupee opened stronger on Monday, even as markets weighed the impact of an additional 25% tariff on Indian goods proposed by US President Donald Trump, set to take effect on August 27.

The currency’s upward move was partly driven by optimism that the Russia-Ukraine war could ease after the scheduled US-Russia talks on August 15, potentially leading to the removal of additional tariffs on India.

The rupee opened 13 paise higher at 87.53 against the US dollar, up from Friday’s close of 87.66. Analysts expect the immediate trading range to be between 87.25 and 87.80. Markets are also awaiting key domestic inflation data — CPI on August 12 and WPI on August 14 — alongside US inflation numbers.

If implemented, the new US tariffs are likely to pressure the rupee in the short term by reducing export revenues, triggering capital outflows, and adding inflationary pressures. Sectors such as textiles, leather, and seafood are expected to be the hardest hit. India has sharply criticised the move, calling it “unfair and unreasonable,” noting that Washington imposed a harsher 50% rate on India compared to 30% for China and 15% for Turkey, despite all three importing Russian oil.

In commodities, Brent crude fell to $66.25 per barrel in Asian trade on Monday, extending last week’s steep declines as traders anticipated that upcoming US-Russia talks could ease geopolitical tensions.

Meanwhile, China’s July economic indicators and inflation data showed only a slow recovery, dampening oil market sentiment on future demand. In Indian equities, foreign institutional investor (FII) selling persisted last week, reflecting broader risk aversion in emerging markets. However, steady domestic institutional investor (DII) buying helped cushion losses.

With inputs from IANS