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On Friday (April 4), the Indian currency appreciated 34 paise to 84.96 in early trade, as traders reacted to President Donald Trump’s aggressive new tariff policy and fears of a slowdown in the US economy.
rally came after the dollar index plunged nearly 2% on Thursday (April 3) — its worst single-day drop in over two years.
Markets worry that sweeping tariffs on over 60 countries, including India, will fuel inflation and dent global growth.
“The blowback on the US economy leaves the dollar naked,” ING Bank said, adding that consumer pain from higher import costs could hit confidence and demand.
At the interbank forex market, the rupee opened at 85.07 and quickly strengthened to 84.96.
On Thursday (April 3), it had already gained 22 paise to settle at 85.30.
The currency’s rebound is being driven by:
- A steep fall in Brent crude prices (down 0.84% to $69.55/barrel),
- A weaker dollar index (down 0.42% to 101.64),
- And expectations of four Fed rate cuts this year, starting June.
Traders also unwound long dollar positions as fears of a U.S. recession mounted. The 2-year Treasury yield hit a six-month low, reinforcing bets on rate cuts.
“Among emerging Asian economies, India has emerged relatively unscathed in the tariff battle,” said Amit Pabari, MD, CR Forex Advisors.
He noted that India faces a softer effective US duty of 26%, well below what export-heavy economies like China and Vietnam face.
“This strengthens India’s competitive positioning and provides relative resilience to its currency,” he added.
Asian peers, including the Korean won, also rallied.
However, Indian equities slid, tracking global weakness.
A currency trader summed up the mood: “If the rupee held up on a day like yesterday, you have to wonder what will trouble it.”
“I keep thinking there’s no more downside on the dollar/rupee pair — and yet it keeps falling.”
–With inputs from PTI and Reuters
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