The Indian Rupee surrendered its initial value on Monday to close lower to 87.60 against the dollar because market jitters of possible tariffs a looming tariff to the US and other economies overshadowed the message of a possible rate cut by the Federal Reserve. The domestic currency opened 14 paise higher but closed 7 paise lower according to reports. The rupee has declined 2.15 percent in the ongoing financial year and 2.30 percent in the year till now, although the currency rose a little of about 0.20 percent in August versus the dollar.
Powell hinted on a future rate cut by saying that the balance of risks has swung in favour of one, as fed was disappointed with employment numbers. Powell reiterated the continued threat of an elevated inflation risk, which it attributed to tariffs implemented during the Trump administration. The market currently assigns a 84 percent probability of rate cut in the next Federal Open Market Committee (FOMC) meeting to be held on September 16-17. At the same time, the dollar index that compares the greenback against a basket of six major currencies gained 0.21 percent to 97.92, which is an indication of continued global demand of the US currency.
The market of commodities is going up because of the geopolitical crisis, with a Ukrainian attack on the Russian nuclear plant triggering concerns about the possible supply chain disruptions of Russian oil. Crude oil prices were up with Brent crude increasing by 0.28 percent to 67.92 dollars a barrel, with WTI crude appreciating by 0.35 percent to 63.88 dollars a barrel as of 3.35 PM IST.
The uncertainties around tariffs paired with geopolitical risks and anticipations of change in monetary policy in US led to a volatile trading session in the Indian Rupee.
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