MUMBAI: The Indian rupee strengthened in early trading on Tuesday, after US President-elect Donald Trump denied a media report that suggested his trade tariffs might not be as stringent as feared.
The rupee was at 85.6750 against the US dollar as of 10:10 a.m. IST, up from its close at 85.8275 in the previous session.
The rupee fell to its all-time low of 85.84 on Monday.
The dollar dropped about 1% against major peers following a Washington Post report that said Trump’s aides are considering tariffs on every country, but only on sectors seen as critical to national or economic security.
Trump denied the report, which supported the dollar and helped it halve its initial losses.
The dollar index was last quoted at 108.2 while Asian currencies logged slight gains.
The dollar index has risen about 3% since Trump’s election in November.
“If we’ve learned anything over the years, it’s that Trump is unpredictable. He loves shaking up markets, but the final outcomes are often less dramatic than his initial announcements,” ING Bank said in a note.
“As our traders say: welcome to the age of Trump 2.0.”
On the day, the rupee also benefited from strong dollar sales from at least two large foreign banks, likely on behalf of custodial clients, a trader at a state-run bank said.
Benchmark Indian equity indexes were in the green after slumping over 1.5% in the previous session.
Concerns about India’s slowing economic growth have contributed to keeping inflows into Indian equities tepid. Foreign investors have net sold stocks worth about $800 million in January so far.
Investors will keep an eye on India’s first advance estimates of gross domestic product for the ongoing financial year due later in the day.
An initial government projection had pegged GDP growth at 6.5%-7%.
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