Indian rupee faces tug-of-war at open as Trump mixes tariff threats with trade talks

MUMBAI: The Indian rupee is set to see choppy price action at the open, caught between US President Donald Trump’s optimistic outlook on trade talks with New Delhi and his push for Europe to slap steep tariffs on India over Russian oil imports.

The 1-month non-deliverable forward indicated the rupee will open in the 88.08-88.12 range versus the US dollar, compared with 88.1025 in the previous session.

Trump said that Washington and New Delhi are continuing negotiations to address trade barriers, adding that he is certain there will be no difficulty reaching a successful outcome.

His remarks suggest that tariff tensions between the two countries could eventually be resolved through dialogue.

At the same time, Trump urged the European Union to impose tariffs of up to 100% on China and India over its purchases of Russian oil, which has been a major cause of friction in its relations with Washington.

The US has already imposed punitive tariffs on Indian goods - among the steepest levies on any American trading partner.

The progress of US-India trade negotiations is seen a key driver for the rupee’s direction.

The currency has underperformed its Asian peers due to the tariffs and a breakthrough would provide much-needed relief for the rupee.

Absent that, further weakness looks likely, especially after the rupee slid to a all-time low against the dollar last Friday.

Meanwhile, Indian equities were set for a higher opening on Wednesday, though traders noted the move was more in line with the advance in US equity futures and Asian peers rather than any positive read-through from the latest tariff headlines.

“It’s very hard to call today, and I am not sure what to make of the news headlines,” a currency trader at a bank said.