MUMBAI: The Indian rupee is expected to open lower on Tuesday tracking a decline in most of its regional peers as a selloff in US tech stocks and developments related to trade tariffs dampened risk appetite.
The 1-month non-deliverable forward indicated that the rupee will open weaker at 86.45-86.46 to the US dollar compared with the previous session’s close at 86.3425.
The S&P 500 and the Nasdaq 100 fell 1.5% and 3%, respectively, on Monday as the surging popularity of a low-cost Chinese artificial intelligence model raised doubts about the lofty valuations of the US tech sector.
Indian rupee to remain burdened by dollar outlook, importer demand
Amid the sell-off, safe-haven assets such as government bonds, the yen and the Swiss franc rallied. The dollar index was a tad higher on Tuesday while most Asian currencies declined between 0.1% and 0.4%.
Alongside the tech selloff, developments related to US trade tariffs also presented a headwind to Asian currencies.
US President Donald Trump said on Monday that he plans to impose tariffs on imported computer chips, pharmaceuticals and steel.
Meanwhile, a Financial Times report stated that Trump’s pick for Treasury secretary, Scott Bessent, has been pushing for new universal tariffs on US imports starting at 2.5% and rising gradually by the same amount each month.
In a call with Indian Prime Minister Narendra Modi on Monday, Trump stressed the importance of moving toward a fair bilateral trading relationship.
Meanwhile, the Reserve Bank of India announced a host of measures post-market hours on Monday, which analysts and traders reckon could be a precursor to a rate cut next month.
“We continue to think the RBI is pivoting towards supporting growth, even as it is unlikely to completely let INR go,” MUFG Bank said in a note.
The bank expects the RBI to intervene in foreign exchange markets “less aggressively moving forward” and cut rates by 25 basis points in its February policy decision.
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