MUMBAI: The Indian rupee is poised to open higher on Monday, supported by a likely rally in local equities after Prime Minister Narendra Modi’s sweeping tax reforms to boost growth, though persistent U.S.–India trade tensions should cap the advance.
The 1-month non-deliverable forward indicated the rupee will open in the 87.50-87.52 range versus the U.S. dollar, compared with 87.55 on Thursday. Indian financial markets were closed on Friday.
Gift Nifty futures indicated that the Nifty 50 will open more than 1% higher after India announced sweeping tax reforms to lift the economy in the face of a trade conflict with Washington.
The rupee will “see a bit of lift from equity, however it’s hard to see it doing much with the U.S.–India trade cloud hanging overhead,” said a Mumbai-based FX trader.
“The downside (on dollar/rupee) is capped, and any dip will likely be faded.”
Trump-Putin meeting
The outcome of the weekend’s Trump–Putin meeting did not evoke much of a reaction from Asian equities and currencies.
U.S. President Donald Trump has said a full-fledged peace deal for Ukraine remained the ultimate aim rather than a mere ceasefire.
After talks with Russian President Vladimir Putin, Trump said he would delay new tariffs on countries like China that continue purchasing Russian oil.
Absent from his remarks was any reference to India, which remains on track to face an additional 25% duty starting August 27.
Adding to the pressure on the rupee, Washington has scrapped a planned August 25–29 visit by trade negotiators to New Delhi, shelving discussions on a potential trade deal and extinguishing hopes of relief from the fresh tariffs on Indian goods.
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