MUMBAI: The Indian rupee will be under pressure on Tuesday after US President-elect Donald Trump pledged to impose tariffs on all imports from Canada and Mexico and levy an additional 10% tariff on Chinese products, boosting the US dollar.
The 1-month non-deliverable forward indicated that the rupee will open at 84.32-84.33 to the US dollar compared with 84.2875 in the previous session. The dollar index rose 0.4% to 107.3 following Trump’s comments.
“As one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% tariff on all products coming into the United States,” Trump said in a post on the social media platform Truth Social.
On China, Trump accused the country of not taking strong enough steps to curtail the flow of illicit drugs crossing the border into the US from Mexico.
“Until such time as they stop, we will be charging China an additional 10% Tariff, above any additional Tariffs, on all of their many products coming into the United States of America,” Trump said.
The offshore Chinese yuan declined to a four-month low following Trump’s comments while the Mexican peso and the Canadian dollar weakened by 1.5% and 1%, respectively, against the dollar.
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Weakness in the yuan will “expectedly spillover (to the rupee) but expectations that the Reserve Bank of India will be active near 84.50 levels should keep the decline limited,” a trader at a state-run bank said. The rupee had declined to its all-time low of 84.5075 last week.
While Trump’s decision to nominate investor Scott Bessent as Treasury Secretary had calmed market nerves and cooled the dollar on Monday, Trump’s “protectionist tendency and volatile temperament imply that uncertainty for markets will remain,” DBS Bank said in a note.
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