- Indian Rupee (INR) is falling, extending last week’s losses
- US applied 50% tariffs on Indian imports
- US Dollar (USD) is rising versus major peers
- Attention turns to US inflation data tomorrow
The US dollar-to-Indian rupee (USD/INR) exchange rate rose on Monday, adding to gains from last week. The pair rose +0.28% in the previous week, settling on Friday at 87.48. At 21:30 UTC, USD/INR trades 0.18% higher at 86.64 and traded in a range of 87.46 to 87.75.
The rupee is falling as the focus remains on the US-India trade outlook. India hopes that trade talks with the US will continue even as the latter hiked tariffs on Indian imports to 50% due to India’s purchase of sanctioned Russian oil.
Last week, U.S. President Donald Trump imposed an additional 25% tariff on Indian goods due to the country’s continued purchase of Russian oil, which raised the duty on Indian exports into the US to 50% among the highest of any American trading partner.
A U.S. trade delegation is set to visit New Delhi from August 25th for further talks.
The trade between the US and India, the world’s largest and 5th largest economies, was worth $87 billion in the last fiscal year.
The US Dollar is rising against its major peers. The US Dollar Index, which measures the greenback against a basket of major currencies, is rising 0.32% to 98.5, after losses last week.
U.S. dollar edged up against its major peers on Monday, a day ahead of the US inflation report, which could help determine whether the Federal Reserve will lower borrowing costs next month.
While the US dollar fell last week as investors adjusted expectations for interest rate cuts from the Federal Reserve after soft and expected U.S. jobs and manufacturing data.
Federal Reserve officials also sounded increasingly uneasy about the US job market, signalling their openness to a rate cut as soon as next month.
Cooling inflation could further support a rate reduction. However, should signs start to emerge that President Trump’s tariffs are adding inflationary pressures, that could keep the Fed on hold. Expectations are for core CPI to rise 0.3% month on month, pushing the annual rate to 3%
