By Nimesh Vora
MUMBAI (Reuters) – The Indian rupee is poised to fall at open on Thursday, driven by the decline in Asian equity and currency markets after U.S. President Donald Trump’s imposition of broad-based tariffs.
Trump slapped 26% tariffs on imports from India effective from April 9, a component of his comprehensive plan to place duties on all U.S. imports.
The non-deliverable forward market indicated that the rupee will open at 85.70-85.75 to the U.S. dollar compared with 85.4975 in the previous session.
If the “extent of the damage” on the rupee is “only” this much then it “will happily take it”, a currency trader at a Mumbai-based bank said.
“I would have expected a bigger up move (on dollar/rupee), past the 86 level,” the trader said.
Trump imposed a 10% baseline tariff on all imports from April 5 and higher duties on certain other countries including 34% on China and 20% on the European Union.
“The average tariff rate appears higher than expected,” ING Bank said in a note.
“The worst-hit region by this tariff announcement is undoubtedly Asian EM,” ING said, adding that Vietnam, Korea, India, Indonesia and Thailand will be subject to extra tariffs in the area of 25% to 45%.
The offshore Chinese yuan dropped to a one-month low of 7.3482 versus the U.S. dollar, before recovering marginally to a current rate of 7.32.
U.S. equity futures experienced a near 3% decline and Japanese equities registered similar losses. Indian equities were also set for a weak open.
U.S. Treasury yields dropped amid worries over how the tariffs will impact growth for the world’s biggest economy.
KEY INDICATORS:
** One-month non-deliverable rupee forward at 85.99; onshore one-month forward premium at 21.50 paise
** Dollar index down at 103.06
** Brent crude futures down 2.2% at $73.3 per barrel
** Ten-year U.S. note yield drops to 4.08%
** As per NSDL data, foreign investors sold a net $740.3mln worth of Indian shares on Apr. 1
(Reporting by Nimesh Vora; Editing by Eileen Soreng)
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