The Indian rupee will be under pressure on Tuesday after US President-elect Donald Trump promised to impose tariffs on all imports from Canada and Mexico and levy additional 10% tariffs on Chinese goods , which boosted the US dollar.
The one-month non-deliverable futures contract indicates that the rupee will open at 84.32-84.33 to the US dollar, up from 84.2875 in the previous session.
The dollar index rose 0.4% to 107.3 after Trump’s comments.
“As one of my first many executive orders, I will sign all necessary documents to impose 25 percent tariffs on all products entering the United States on Mexico and Canada,” Trump said. in a post on the social media platform Truth Social.
As for China, Mr. Trump accused the country of not taking strong enough action to reduce the flow of illicit drugs across the U.S.-Mexico border.
“Until they stop, we will impose additional 10% tariffs on China, on top of all other tariffs, on all their products entering the United States of America,” said Mr. Trump.
The Chinese yuan fell to a four-month low following Mr. Trump’s comments, while the Mexican peso and the Canadian dollar weakened by 1.5% and 1%, respectively, against the dollar.
Weakness in the yuan “is likely to spill over (to the rupee), but expectations that the Reserve Bank of India will be active near 84.50 levels should limit the decline,” a state bank trader said .
The rupee hit its all-time low of 84.5075 last week.
While Trump’s decision to nominate investor Scott Bessent as Treasury secretary calmed market nerves and cooled the dollar on Monday, Trump’s protectionist streak and volatile temperament mean uncertainty for markets will remain. “, DBS Bank said in a note.
KEY INDICATORS:
** One-month rupee undeliverable at 84.44; one month onshore forward premium at 12 paisa.
** Dollar index at 107.21
**Brent up 0.3% to $73.2 per barrel** Ten-year US bond yield at 4.28%.
** According to NSDL data, foreign investors purchased $127 million worth of Indian stocks on November 22.
** According to NSDL data, foreign investors sold $46.3 million worth of Indian bonds on November 22.
