Rupee's fall past 87/USD on tariff worries prompts likely intervention
rupee fell
to its weakest level since mid-March on Wednesday, hurt by worries over the U.S. potentially imposing a steep tariff rate on Indian exports, though likely intervention by the
Reserve Bank of India
helped limit the currency's losses.
The rupee was down nearly 0.5% on the day to 86.23 against the
U.S. dollar
as of 10:10 a.m. IST.
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U.S. President Donald Trump said Indian exports to the U.S. would likely see 20%-25% tariffs while speaking to reporters on Tuesday, compounding pressure on the currency from sustained portfolio outflows.
India is holding off on fresh
trade concessions
ahead of the August 1 deadline and instead aims to wrap up a comprehensive bilateral deal by September or October, a government official told Reuters.
The developments come as other nations including Indonesia and Japan have finalised trade deals with the U.S. over the last few weeks.
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While the rupee seemed poised for steeper losses on Wednesday, the central bank's likely intervention helped it avert those, an FX salesperson at a large foreign bank said.
In the near-term, "expect RBI to continue smoothening volatility while chances of firm intervention to lift the currency are low due to the uncertain environment," the salesperson added.
On the day,
Asian currencies
were mostly rangebound while the dollar index eased slightly to 98.8.
As long as the dollar-rupee pair "stays above 86.62, the trend looks positive and buying on dips is favorable," said Ritesh Bhansali, deputy chief executive at FX advisory firm Mecklai Financial.
In addition to uncertainty on trade,
foreign portfolio outflows
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