Latest News

The rupee is a little higher, but the US tariffs are keeping traders cautious.

The Indian rupee rose slightly during early trading on February 2, in line with a rise in other Asian currencies. However, traders were cautious, waiting for clarity regarding the ongoing trade talks between India and the United States.

The rupee was up 0.16 percent on the day to 85.71 dollars at 10:25 am IST.

Most regional counterparts gained when U.S. president Donald Trump delayed the imposition steep reciprocal levies until August 1, giving countries more time to negotiate trade deals.

The White House sent letters to 14 countries stating the duties that would be applied on their exports in just over three weeks. Trump claimed that he was nearing a deal with India.

Market participants were comforted by the fact that they still had time to negotiate with the largest economy in the world.

MUFG stated in a report that "this modest reaction may be a function either of market pricing for the ability to negotiate tariffs down, or possibly a continuation in the TACO trade (Trump Always Chickens Out)."

The traders say that despite the uncertainty surrounding the outcome of the trade negotiations, aggressive bets on the rupee are unlikely to occur, due to the potential for news-driven movements.

A trader from a private banking firm said that the sharp drop in the rupee during the previous session had many traders on their wrong side. This has led to a level of caution moving forward.

On Monday, the local currency fell by up to 0.7% after Trump threatened to levy a tariff of 10% on BRICS nations.

Separately, another source with knowledge of the issue said that the tariffs would only be imposed if the countries took so-called anti-American policy actions.

(source: Reuters)