On Tuesday, the Indian Rupee closed on a firmer note and in concurrence with most of the currencies of the Asian region due to the trade tension between the United States and some of the global economies, making a new twist. The domestic unit made a 16-paise upward jump to 85.70 against the U.S. dollar, settling above the sharp intra-day fall on Monday, which had been its worst move so far in the current year. The rupee had gone up to 86 in the previous session during intraday trade.
The bounce followed the speculations of a possible revival of the trade talks by U.S. President Donald Trump, besides the imposition of new tariffs by his administration on various countries. According to the new tariff regime, Japan, South Korea, Malaysia, and Kazakhstan will be required to pay the 25 per cent duty on their export of goods to the U.S., and Indonesia, Bangladesh, Cambodia, and Thailand will pay even higher tariffs ranging between 32 and 36 per cent.
Although India is yet to come out as a direct target of the new tariffs, uncertainty hangs. In his comments made on Monday, Trump threatened to impose more tariffs on the BRICS-allied nations, which refers to India as part of it. It is this indecisiveness, along with a wider geopolitical situation, that remains a drag to the attitude of investments.
The dollar index tracking the US greenback relative to a basket of six most widely used major world currencies took a low stand after the pronouncement by Trump, but was only down by 0.13 per cent at 97.35. This year, the index has plummeted by 10.32 per cent cumulatively, and this has been mainly influenced by global trade dynamics changes, and failure to understand the policies of the Federal Reserve. Now investors are keeping a close eye on the publication of the Fed meeting minutes that may give some hints to the further trend of interest rates and hence dollars to come in the U.S.
In commodities, meanwhile, prices of crude oil cooled off following news that OPEC+ would make a production increase by larger-than-anticipated volumes. The Brent crude dropped by 0.59 per cent to 69.17 dollars per barrel, and the WTI descended to 67.39 dollars per barrel at 3.30 PM IST.
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