The rupee opened at 87.5050 but failed to extend gains, ending flat at 87.6600 against Friday’s close of 87.6600.
Traders said private sector banks stepped in to buy dollars, largely on behalf of importer clients hedging positions amid heightened market volatility, after U.S. President Donald Trump’s decision to impose 50% tariffs on Indian goods.
Over the past two weeks, the rupee has come close to breaching its all-time low of 87.95, but intervention by the Reserve Bank of India in both the NDF and onshore spot markets helped prevent a new low.
Analysts warned that the steep tariffs – among the highest imposed by the U.S. on any trading partner – could weigh on exports and dampen capital flows into India.
“Banks are vigilant on creating positions due to the volatility from tariff uncertainty and the corresponding interventions being made by the central bank,” said Dilip Parmar, forex analyst at HDFC Securities. Meanwhile, Asian currencies held largely steady against a softer dollar, as investors stayed cautious ahead of the U.S. July inflation report and the expiry of a U.S. tariff deadline on China. The Philippine peso and South Korean won slipped between 0.1% and 0.3%, while most other regional units were little changed. The dollar index was largely flat at 98.254 at 1018 GMT, and has been volatile through the day, on growing expectations of a Federal Reserve rate cut next month.
The U.S. inflation data for July, due Tuesday, will be key to gauge the Fed’s rate-cut expectations and the dollar’s direction.
