The rupee closed at 85.3825 against the U.S. dollar, up 0.23% on the day.
Inflows related to the rejig of a global equity index helped the rupee move higher in early trading while broad-based dollar weakness was an added tailwind, traders said.
The dollar index fell below the 99 level amid concerns of a re-escalation in global trade tensions after U.S. President Donald Trump accused China of violating an agreement with the U.S. to mutually roll back tariffs.
Trump has also pledged to double tariffs on imported steel and aluminium starting Wednesday.
India estimates a “minor impact” from U.S. President Donald Trump’s plan to increase tariffs on steel and aluminium products, per the country’s federal steel minister. “A shift to a more confrontational stance on trade between the US and China, plus a focus on a potential US ‘revenge tax’ on foreign investors, are weighing on the dollar,” ING Bank said in a note. Worries about the trade tensions also weighed on Asian stocks on Monday. Indian equities dipped marginally.
Meanwhile, Wall Street analysts have cautioned that a tax targeting foreign investors in the U.S. budget bill progressing through the country’s legislature could end up weighing on demand for U.S. Treasuries and the dollar.
Domestically, the focus this week lies on the Reserve Bank of India’s upcoming monetary policy decision due on June 6. The central bank is widely expected to deliver its third 25-basis-point rate cut.
