Indian rupee dips but firmer yuan, exporter dollar sales cushion losses
The rupee closed at 86.4075 per U.S. dollar, down slightly from its close at 86.3675 in the previous session but managing to hold above the 86.50 support level.
The offshore Chinese yuan rose to a near three-week high while the dollar index was a tad lower at 97.4.
Dollar sales from a large private bank and exporter activity also helped the rupee contain its losses on the day, alongside positive regional cues, a trader at a state-run bank said.
India's benchmark equity indexes, the BSE Sensex and Nifty 50 closed higher by about 0.6% each, tracking gains in global equities that were buoyed by hopes of easing trade tensions after a deal between the U.S. and Japan.
'Equity markets globally are rallying on the view that deals reduce uncertainty,' ING said in a note.
Indian rupee weakens slightly, broad dollar softness cushions pressure
U.S. President Donald Trump also announced a trade agreement with the Philippines, released terms of a previous deal with Indonesia on Tuesday and said that EU representatives were coming for trade negotiations on Wednesday.
Officials from China and the U.S. are also expected to meet next week to discuss an extension to the deadline for negotiating a trade deal.
For India, though, the prospects of a trade deal before the August 1 deadline have dimmed, with talks deadlocked over tariff cuts on key agricultural and dairy products.
Foreign portfolio outflows and the lack of an outcome on trade negotiations have maintained pressure on the rupee, said Dilip Parmar, a foreign exchange research analyst at HDFC Securities.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Express Tribune
35 minutes ago
- Express Tribune
AI policy to be approved soon, says Shaza
Shaza also revealed that Chinese satellite internet firms, including Galaxy Space and Shanghai Space, have expressed interest in entering the Pakistani market. PHOTO: APP Information Technology and Telecommunication Minister Shaza Fatima Khawaja said on Wednesday that Pakistan's AI policy, which was finalised after a year of consultations at home and abroad, is likely to be approved soon. Speaking at a seminar at Quaid-i-Azam University, the minister reaffirmed the government's strong commitment to implementing the AI policy. She urged all stakeholders to play an active role in turning the policy into reality. "Our main focus now is on putting the policy into action," she said. "We want everyone to join this journey and help bring the ideas to life."
Express Tribune
4 hours ago
- Express Tribune
Sino-US rivalry — collusion, competition, conflict
The writer is a retired major general and has an interest in International Relations and Political Sociology. He can be reached at tayyarinam@ and tweets @20_Inam Listen to article The US-China competition remains the 'defining issue' of international politics. My last piece titled the "Sino-US rivalry" was published in this space on January 11, 2024, where some relevant writings of the CNN-famed Fareed Zakaria and others were discussed. Given the comparative National Power Potential (NPP), the world seems to be drifting from unipolarity, ushered in after the collapse of the Soviet Union in 1990s; to the 'present state' of bipolarity (the US and China); and to the likely future scenario of multipolarity (China, Russia, EU, India and Brazil). First, a bipolar comparison. Conventional view is that China is 'already a US peer or near-peer, economically'. However, as I had pointed out, in the present state of competition, China still needs to do a lot of catching up, as the American NPP — especially its military strength, power of alliances and its cosmopolitan, multicultural and educated demography — far outpaces China, the 'hesitant regional power' that is trying to become a more assertive superpower. The US GDP is almost twice as large as China's and some analysts believe that the Chinese official figures are fudged, with Beijing manipulating key economic metrics, including GDP. China is heavily dependent upon fuel imports; has almost 20% housing vacancy rates and over $1 trillion in debt from its 48,000 km high-speed rail networks. The US by comparison leads in key high-technology sectors like the IT/software and services sector (80% of global profit shares); aerospace and defence (66.35%); drugs and biotechnology (60%) and semi-conductors/chips (58%, compared to China's miniscule 2.6% share). Then there are studies indicating that in a full-blown trade war, 'decoupling' China from the international economic system (sanctions) will disproportionately hurt Beijing, if China has not undertaken economic hardening like Russia. Moscow, in anticipation of the West Plus's reaction to Ukraine, had taken on years of pre-emptive economy-hardening steps to mitigate the ill-effects of sanctions. China's other handicaps include demographic weakness (overpopulation, effects of one-child policy, aging population); lack of alliances; its lighter presence in important global regions (Europe, the Middle East); its comparatively subdued power to influence others; China's lack of experience and exposure to act big, unlike the US, having the benefit of history and multicultural pluralism; and China's nagging legacy of trouble-spots (Spratly Islands, Tibet, Turkestan, human rights, etc). So far, there is no alternative to US power. But that does not mean China is and will not catch up. Second, the prospect of a Sino-US conflict. One had disagreed with the likelihood of conflict, as Beijing is likely to blink first, because the global status quo is protective of its core interests. Additionally, China is not a 'spoiler state' like Russia. President Xi abandoning his 'lone-wolf diplomacy' has often asked the US to lift sanctions, especially on technology transfers. And President Trump recently lifted ban on the sale of America's Nvidia-made semiconductors (especially the H20) to China. US's I-Phone is designed in California and assembled in China by a Taiwanese company, Foxconn. And in more curious case of inter-dependence, China monopolises supply of rare-earths, needed for US-manufactured semiconductors, to be used in China's high-end products, for export to the US/Western markets. There are more anti-conflict indicators, especially about the much-touted US-China conflict over Taiwan. There is a great deal of soul-searching in the American policy establishment about the cost-benefit of a war to defend Taiwan against a Chinese invasion. The US rationale in defending Taiwan is to prevent China from gaining a new foothold to project power in East Asia and disrupt trade routes in the western Pacific, thus upsetting the western-dominated global economy. America's 'vital' interest, however, is to prevent China from regional hegemony in Asia. In reality, Taiwan does not confer any outsized military advantages to China, other than extending the range of its missiles, AD assets and surveillance systems by a couple hundred 'unneeded' kilometres. Beijing can still target US regional assets in Guam, Japan and Philippines. China's under-sea gains would similarly be modest. In sum, Beijing's control of Taipei hardly overturns the regional military balance. Military logic and economic considerations, hence, do not warrant direct US involvement to defend Taiwan. Taiwan's TSMC still produces 90% of the world's most advanced chips. However, by 2032, the US company, Boston Consulting Group, will be producing 28% of the most advanced semiconductors. Likewise potential blockade of the narrow sea-lanes in East and South China seas by China marginally affects the global sea trade, as bypassing options exist through Indonesian and Philippine archipelago. Similarly, the notion that Chinese invasion undermines the US credibility is also geostrategically flawed, as fighting China over Taiwan unnecessarily binds US resources, needed elsewhere for the bigger objective of containing China. The US military prioritises developing the 'second island chain' of Guam, Marshal and Northern Mariana Islands, Micronesia and Palau for this purpose. In the US reckoning, Taiwan certainly matters, but not enough to justify war with China, as composite deterrence would likely work to dissuade China. And if push comes to shove, PLA will prevail in a conflict with Taipei with or without the US, the former scenario being more costly for the US Armed Forces. The suggestions that Taiwan should become a 'porcupine' in its denial-focused strategy against Chinese invasion is also not likely to work, as the island just does not spend enough on its defence, and ignores acquisition of anti-ship defence, naval mines, uncrewed weapons and drones. Taiwan can make the invasion slow, long and costly but not impossible, as its geography, low and dwindling materiel stockpiles in case of a Chinese naval blockade would ultimately tilt the operational balance in China's favour. So, no wonder, Washington officially supports 'One China' policy, respects China's redlines and there is much noise in Washington about 'competitive co-existence' with China. Third, alliances and economic integration. China remains one of the most important markets for EU especially Germany's export-driven economy. It meanders carefully through bloc politics, tries to be a peacemaker in the Middle East and vies for leadership mantle in the Global South. It is wary of a conflict with the US and so is the US. So, collusion, competition short of conflict will persist and recur.
Business Recorder
5 hours ago
- Business Recorder
US, EU trade talks boosted by Trump's agreement with Japan
BRUSSELS: The European Union and the U.S. are heading for a potential trade deal that includes a 15% U.S. baseline tariff on EU goods and possible exemptions, two European diplomats said on Wednesday, potentially moving President Donald Trump closer to securing another major trade agreement hours after he unveiled one with Japan. European negotiators were hoping to reach an agreement to dodge the 30% tariff rate Trump has said he would impose on imports from the 27-nation bloc on August 1. The rate, which could also extend to cars, would mirror the framework agreement the U.S. has struck with Japan, which Trump announced late on Tuesday. The deal could include exemptions for some EU goods, the diplomats said. As talks continued, the European Commission said it would press on with potential counter-measures in case a deal was not reached. EU member states were set to vote on 93 billion euros of counter-tariffs on U.S. goods on Thursday, European diplomats said. A broad majority of members support using anti-coercion instruments if there is no deal, they said. Trump was hoping for a boost from the complicated deal reached with Japan, the largest foreign investor in the U.S., which included a $550 investment and loan pledges from Japan and its commitment to buy 100 Boeing airplanes and boost purchases of U.S. agricultural products. EU trade chief heads to Washington in search of tariffs solution Tariffs on Japan's auto sector will drop from 27.5% to 15% as part of the agreement, reviving hopes for a similar deal for EU cars. Asian and European stock markets rallied as investors cheered that agreement, but U.S. stocks showed a more modest rise and earnings reports were gloomy. U.S. businesses making everything from chips to steel reported downbeat results on Wednesday, revealing how the Trump administration's chaotic trade policy has hurt profits, added to costs, upended supply chains and weighed on consumer confidence. Trump said late on Tuesday that other countries would be coming for talks this week and governments were scrambling to close trade deals before next week's deadline that the White House has repeatedly pushed back under pressure from markets and intense lobbying by industry. Auto tariffs Automobile stocks led the climb of European shares after the Japan deal spurred hopes that the U.S. was budging over tariffs on EU cars. EU officials have previously said Washington has shown little sign of doing so. U.S. Treasury Secretary Scott Bessent said in an interview with Bloomberg Television that Japan received the 15% rate on auto tariffs 'because they were willing to provide this innovative financing mechanism' that he did not think other countries could replicate. Trump, however, has appeared open to a range of options as the U.S. negotiates trade deals. 'I will only lower tariffs if a country agrees to open its market,' Trump wrote in a social media post on Wednesday. In addition to talks in Washington, the European Trade Commissioner Maros Sefcovic planned to speak with U.S. Commerce Secretary Howard Lutnick on Wednesday from Brussels.
