Mumbai, Feb 5 (PTI) – The Indian rupee depreciated by 9 paise to 87.16 against the US dollar in early trade on Wednesday, continuing its downward trend amid rising global trade uncertainties. Forex traders indicated that the currency was under pressure due to the ongoing trade conflict between the United States and China, which has led to increased risk aversion among investors.
As global markets react to the imposition of tariffs by the US and China, the rupee’s movement reflects market concerns. However, experts suggest that potential intervention by India’s central bank could provide some support to the rupee in the coming days.
In the interbank foreign exchange market, the rupee opened at 87.13 but further slipped to 87.16, registering a decline of 9 paise from its previous close. On Tuesday, the rupee had managed to recover 4 paise from its all-time low, closing at 87.07 against the greenback.
“The trade war seems to have slowed down for now, with anticipation building around comments from US President Donald Trump regarding European exports and currency values. In the short term, the rupee is expected to remain range-bound within the 86.90 to 87.25 levels,” said Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors LLP.
Trump recently pressed ahead with a 10 percent tariff on US companies importing goods from China. In retaliation, China imposed its own tariffs on select US products and initiated an antitrust investigation into Google. These developments have added to investor uncertainty.
Meanwhile, the US dollar index, which tracks the greenback’s performance against a basket of six major currencies, stood at 107.89, down 0.06%. On the commodity front, global oil prices saw a slight dip, with Brent crude futures trading 0.50% lower at USD 75.82 per barrel.
Investors are also likely to exercise caution ahead of the Reserve Bank of India's (RBI) monetary policy meeting later this week. The RBI’s Monetary Policy Committee (MPC) is set to begin its meeting on February 5 and will announce its policy decisions on February 7.
In domestic equity markets, the 30-share BSE Sensex was down by 17.96 points or 0.02%, trading at 78,565.85. Conversely, the Nifty 50 index rose by 33.40 points, or 0.14%, to 23,772.65.
On the capital markets front, Foreign Institutional Investors (FIIs) were net buyers of Indian equities worth Rs 809.23 crore on Tuesday, according to exchange data.
Traders will be closely monitoring the global trade situation and upcoming policy decisions as they navigate this volatile period in the markets.