The pressure on the India Rupee remained on the second day running, and it closed 19 paise lower at 85.99 per US dollar on Monday, where traders witnessed this decline as we approached the release of the India Consumer Price Index (CPI) data and the growing global tariff pressure. The fall was also the sustained depreciation of the rupee, and in the current financial year, the currency depreciated by 0.59 per cent, and in the current calendar year, the currency has dwindled by 0.47 per cent, according to market analysts.
The new trade tension in the global market, which occurred after Donald Trump, the US president, announced tariffs of 30 per cent on imports from the European Union and Mexico, to be implemented by August 1, is one of the main factors that generated the depreciation of the rupee. Although the EU has held off its counter tariffs, it has sent jitters across global markets, and investors have moved to safer places such as the US dollar, which saw the dollar index increase by 0.03% to 97.88.
To worsen the situation on the home front, the retail inflation data (CPI) that is due later in the day has made traders even more nervous. Inflation already fell to a 75-month low of 2.82 per cent in May, whereas it was at 5.08 per cent a month ago in June 2012. The stronger-than-expected reading may have an influence on the interest rate anticipations and the currency flow.
In the meantime, the Wholesale Price index (WPI) inflation too has gone down to the negative territory at -0.13 per cent in June against a 0.39 per cent in May, indicating deflationary pressures in articles of food, fuel, power and basic metals.
Crude oil prices on the commodities market increased on fears that the US will impose new sanctions on Russia and current uncertainties about trade. Brent crude was at $71.00 a barrel, and WTI crude was at $69.07 with a rise of 0.91 per cent as of 3:20 PM IST.
In sum, an amalgamation of the world protectionist trend, fluctuation in oil prices, and impending home inflation has placed the rupee under threats.
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