FX.co ★ Rupee Weakens on Global Trade Tensions

The Indian rupee declined to approximately 90.2 against the US dollar, continuing its downward trend for the second consecutive session amid escalating global trade tensions. This decline was spurred by US President Donald Trump's announcement of a 25% tariff on nations engaged in commerce with Iran. Investor sentiment was negatively impacted, especially as India, which already contends with 50% tariffs on its exports to the United States, faces the risk of incurring further costs. This includes 25% of the existing tariffs being punitive duties on crude oil imports from Russia. In a separate development, the Reserve Bank of India's (RBI) currency measures helped mitigate some of this pressure. The central bank is scheduled to perform a $10 billion foreign-exchange swap on Tuesday. In this transaction, the RBI will buy dollars and release rupees initially, to be settled on Friday, and then reverse the transaction in three years. Analysts are closely monitoring the cut-off rate, as these auctions enable the RBI to effectively manage forward short positions while absorbing excess dollar liquidity.