Mumbai, July 31: The rupee recovered 22 paise from its all-time low to 87.58 (provisional) against the US dollar on Thursday, amid lower crude prices and suspected RBI interventions, after US President Donald Trump’s announcement of 25 per cent tariffs on Indian imports and a penalty for buying Russian Crude.
Forex traders said the rupee, after plunging 89 paise, logging its steepest single-day fall in over three years on Wednesday, recovered some lost ground but the broader outlook remains cautious.
At the interbank foreign exchange, the domestic unit opened at 87.66 against the greenback, touched an intra-day low of 87.74 and a high of 87.51 against the American currency.
At the end of Thursday’s trading session, the local unit settled at 87.58 (provisional), down 22 paise over its previous closing price.
Forex traders said following the US’ imposition of a 25 per cent tariff on Indian exports triggered risk-off sentiment and heightened concerns regarding further rupee depreciation.
Till there is clarity on the tariff front, pressure on the rupee is likely to persist, CR Forex Advisors MD Amit Pabari said, adding that a meaningful reversal can only be expected if the pair breaks below 87.20, which currently acts as a key support level.
On Wednesday, the rupee closed at an all-time low of 87.80 against the US dollar after America announced a sweeping 25 per cent tariff on Indian imports in the absence of a trade deal ahead of the August 1 deadline.
It was not clear if the 25 per cent duty will be imposed in addition to the existing 10 per cent baseline tariff. The 10 per cent tariff, which currently applies to most Indian goods barring a few, was announced by Trump on all countries on April 2.
Also, the exact quantum of the penalty is unclear.
Meanwhile, negotiations for the proposed bilateral trade agreement are on as a US team is visiting New Delhi on August 25 for the sixth round of talks.
The top officials of the two countries concluded the fifth round recently in Washington.
“While the RBI may also intervene in the spot market to control volatility, the broader outlook remains cautious. If the rupee continues to face downward pressure then could potentially test the resistance level of 88 should trade tensions escalate further,” said Harsimran Sahni, EVP & Head – Treasury, Anand Rathi Global Finance.
In the domestic equity market, the 30-share BSE Sensex declined 296.28 points, or 0.36 per cent, to close at 81,185.58, while the Nifty fell 86.70 points, or 0.35 per cent, to settle at 24,768.35.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose by 0.03 per cent to 99.84.
Brent oil prices fell 0.67 per cent to USD 72.75 per barrel.
Meanwhile, the US Fed held interest rates steady and signalled it is too early to consider rate cuts, which has supported the dollar throughout the month of July.
Foreign institutional investors (FIIs) offloaded equities worth Rs 850.04 crore on a net basis on Wednesday, according to exchange data. (PTI)
