Rupee’s fall past 87/USD on tariff worries prompts likely intervention

MUMBAI: The Indian 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.

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.

Indian rupee slips but sidesteps firmer dollar as flows dominate price-action

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 have been a persistent drag for the rupee. Overseas investors have net sold over $1.5 billion worth of local stocks over July.