- Indian Rupee (INR) falls for a fourth day
- The RBI cut rates in line with expectations
- US Dollar (USD) recovers from session lows
- Trump pauses tariffs but lifts tariffs further on China
The US dollar-to-Indian rupee (USD/INR) exchange rate is rising for a fourth straight day. The pair rose 0.45% in the previous session, settling on Tuesday at 86.24. At 21:30 UTC USD/INR trades 0.09% higher at 86.31 and is in a range of 85.86 to 86.86.
The Rupee is falling after the Reserve Bank of India lowered its key repo rate for a second straight meeting and changed its management policy stance. This signals more rate reductions ahead as the bank looks to support the sluggish economy amid US tariff volatility.
The Monetary Policy Committee reduced the repo rate by 25 basis points to .26% in line with expectations. This follows a 25 basis point reduction in February, which was the central bank’s first cut since May 2020. The central bank adjusted its stance from neutral to accommodative. The move came as the US applied 26% trade tariffs on Indian imports. However, these were later paused.
The US Dollar is rising across the board. The US Dollar Index, which measures the greenback against a basket of major currencies, is rising 0.03% on Wednesday to 102.98 after losses yesterday.
The US dollar fell earlier in the day as the US-China trade war escalated after China imposed 84% tariffs on US goods in retaliation for the US imposing 104% tariffs on Chinese goods.
U.S. dollar was under pressure amid rising concerns over a recession in the US as Trump’s reciprocal tariffs came into effect.
However, the dollar recovered from its worst levels after President Trump announced a 90-day pause on the reciprocal tariffs to 56 countries but lifted tariffs on China from 104% to 125%
Minneapolis Fed President Walker’s comments also supported the dollar when he said that the higher bar for Fed rate cuts due to inflationary expectations from tariffs.
The minutes of the FOMC meeting showed that policymakers expected inflation to be pushed higher this year owing to tariffs. They also acknowledged considerable uncertainties surrounding such tariffs in the March meeting.
