The Indian Rupee lost ground for the third day in a row on Thursday, ending at 85.52 against the US dollar, compared to the previous day’s close of 85.36. The domestic currency stayed within a narrow band until the end of the day and finally finished slightly weaker after a federal judge ruled against Trump’s special ‘liberation day’ tariffs.
The drop in the rupee is happening at a time when global uncertainty is rising and feelings about US trade policy are transforming. According to analysts, the court decision led investors to be more careful, which drove the greenback higher and weakened emerging market currencies. The dollar index rose by 0.13% last week, going up to 100.00, due to increased demand for the US dollar. As a result, the index is still down by 8% for the entire year.
India’s economic signs did not give much reason to be hopeful at home. Growth in industrial production slowed to its weakest level in eight months in April, reaching 2.7%, compared to a revised 3.94% in March, pointing to less activity in factories and wider economic challenges.
Crude oil prices rose after the court made its decision on the tariffs. The international benchmark Brent crude rose 1.43%, ending at $65.83 per barrel, and WTI rose 1.44%, ending at $62.73 per barrel. If oil prices stay higher, they could continue to put pressure on the rupee by raising India’s import charges.
According to analysts, unless the dollar rally cools or signs of stronger domestic growth are seen, the rupee could still move lower. It appears that Indian currency will finish the month having dropped around 1.2% compared to the dollar.
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