MUMBAI: The Indian rupee ended lower for a fifth straight week, its biggest consecutive weekly drop in six months, as trade tensions between India and the United States escalated following President Donald Trump’s call for new tariffs on Indian goods.
The rupee closed marginally higher at 87.6550 against the U.S. dollar, from 87.7025 on Thursday.
The currency opened at 87.5600 and reached an intraday high of 87.5350, supported by unwinding of long dollar positions in the NDF market.
Dollar bids, primarily from oil importers, pushed the USD/INR higher after initial lows, traders said.
For the week, the rupee eased 0.1%, following a 1.2% drop last week, and has depreciated nearly 3% over the past five weeks.
Rising pressure on the rupee was driven by India’s position among the hardest-hit countries in Trump’s trade offensive, including a new 25% tariff on Indian goods.
The move places India alongside Brazil, facing the steepest import duties, unsettling markets concerned about the impact on capital flows and investor sentiment towards Indian assets.
Indian rupee likely to hold ground after Trump ramps up tariff heat on Indian goods
Fears of a record low in the currency prompted the Reserve Bank of India to intervene almost daily, preventing a deeper slide, traders said.
The RBI resumed intervention in the NDF market to manage rupee volatility, four bankers told Reuters.
Market participants expect another drop in foreign exchange reserves that saw a decline of more than $9 billion in week ended August 1, indicating intervention in the spot market.
Meanwhile, some remain hopeful that a resolution would be achieved in coming period.
Looking at the recent history, there is a high probability that the U.S. lowers tariffs in coming weeks or months and this could lead to a relief rally in Indian markets, as and when it happens, said Nishit Master, portfolio manager at Axis Securities PMS.
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