Context:
Rupee appreciations of 0.36%, closing at ₹86.96/USD (previous close ₹87.27/USD). Highest gain in a single day since February 11.
Rupee Up on These Factors
- Weakness of the Dollar
- Dollar index down by 0.6% to 104.9 (lowest since Nov 2024).
- Market fears regarding US economic growth & trade tariffs.
- RBI Intervention
- State owned banks sold dollars for the RBI.
- Providing support to stabilise rupee volatility.
- Positive Global Cues:
- Asian currencies stronger to help rupee.
Trade Tariffs and Uncertainty
- US Tariffs Update
- 25% on imports from Mexico & Canada.
- Import duties on China now doubled to 20%.
- Trump said India would be hit by reciprocal tariffs from April 2.
- Market Reaction
- Initially, the rupee was expected to weaken.
- Talks of tariff removal on Canada created uncertainty, which led to rupee appreciation instead.
Outlook
Short Term: The rupee is expected to remain positive for appreciation.
Long Term: It is expected to start depreciating towards ₹88–89/USD with an expected cut in April.
Volatility is high on account of the developing US trade policies.
