The Indian rupee continues breaching the crucial 90-level mark, opening today at 90.1275 against the US dollar, down 0.06% from Monday’s close of 90.07. The local currency has been on a falling streak for the past week, largely attributed to the stalled trade deal between the US and India and the persistent selling of domestic equities by foreign investors.
US threatens India with new tariffs on rice
Additionally, US President Donald Trump recently warned India of new tariffs on agricultural imports, especially on Indian rice and Canadian fertiliser. Trump, during a meeting at the White House, said that cheap imports are challenging American producers and making it hard for domestic farmers to compete in the market. He further added that he would take care of the “dumping of Indian rice into the US.” This is likely to add downward pressure to the already falling currency.
Outlook for the Rupee
Commenting on the weakness in the Indian currency, Ponmudi R, CEO of Enrich Money highlighted that, “USD/INR continues to hold firm above the 90.00 psychological mark after testing fresh all-time highs near 90.15. The pair remains firmly positioned inside its rising daily trend channel, clearly indicating sustained Dollar strength. As long as the 89.80–90.00 zone holds on a closing basis, the structure stays bullish with upside potential toward 90.50–91.00.”
Money market awaiting Fed decision
Further, all eyes are on the US Federal Reserve’s policy stance, which is weighing on trading sentiment. “The sustained weakness in the rupee and continued FII outflows further aggravated concerns around inflation and import-cost pressures, adding to the bearish tone,” Ajit Mishra – SVP, Research, Religare Broking, said.
Additionally, no intervention by the central bank is expected to support the depreciating currency. In his address on Friday, RBI Governor Sanjay Malhotra stated that no target levels are set for the currency and that market forces will naturally determine its value.