Went
- The Indian rupee opened flat around 88.85 against the US dollar.
- India’s Commerce Secretary Agarwal commented that the high tariff issue with the US has almost been resolved.
- Investors are awaiting US NFP data for September.
The Indian Rupee (INR) opened flat against the US Dollar (USD) on Tuesday. The USD/INR pair continues to trade in a tight range around 88.85, with investors remaining on the sidelines as the United States (US) and India are yet to reach a trade deal despite long-term talks.
The US has been imposing a 50% tariff on imports from India for some months, of which 25% is a reciprocal duty and the rest is levied on buying oil from Russia, which is particularly impacting the volume of goods exported to Washington.
According to research by BofA Securities, exports from India to the US fell 12% in September due to higher tariffs.
Meanwhile, recent comments by US President Donald Trump and India’s top trade negotiator Rajesh Agarwal have indicated that the two countries are close to reaching a consensus soon. On Monday, Commerce Secretary Rajesh Aggarwal said the first part of the bilateral trade agreement with the US is “almost concluded”, which addresses 50% tariffs and market access to the US, and the final deal will be announced at a mutually decided date, PTI reported.
Last week, US President Trump said Washington and New Delhi were close to a bilateral agreement, but did not give any timeframe. Trump said “at some point” he will reduce tariff rates on Indian goods, Bloomberg reported, adding that the US is getting “very close” to a trade deal with New Delhi. He added, “They don’t love me right now, but they’ll love us again,” and “We’re getting a fair deal”.
The table below shows the percentage change in the Indian Rupee (INR) against the major currencies listed today. The Indian rupee remained the strongest against the Australian dollar.
| USD | EUR | gbp | JPY | scurvy | AUD | INR | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.07% | -0.03% | -0.14% | 0.01% | 0.16% | -0.04% | -0.26% | |
| EUR | 0.07% | 0.03% | -0.05% | 0.09% | 0.24% | 0.05% | -0.19% | |
| gbp | 0.03% | -0.03% | -0.10% | 0.05% | 0.20% | 0.00% | -0.23% | |
| JPY | 0.14% | 0.05% | 0.10% | 0.14% | 0.29% | 0.11% | -0.14% | |
| scurvy | -0.01% | -0.09% | -0.05% | -0.14% | 0.15% | -0.04% | -0.28% | |
| AUD | -0.16% | -0.24% | -0.20% | -0.29% | -0.15% | -0.17% | -0.43% | |
| INR | 0.04% | -0.05% | 0.00% | -0.11% | 0.04% | 0.17% | -0.24% | |
| CHF | 0.26% | 0.19% | 0.23% | 0.14% | 0.28% | 0.43% | 0.24% |
The heat map shows the percentage change of major currencies against each other. The base currency is selected from the left column, while the quote currency is selected from the top row. For example, if you select Indian Rupee from the left column and move along the horizontal line to US Dollar, the percentage change displayed in the box will represent INR (basis)/USD (quote).
Daily Digest Market Movers: Traders shrug off Fed’s dovish bets amid inflation risks
- The Indian rupee has remained in a tight range between 88.50 and 89.00 against the US dollar since the beginning of the month. However, a range breakout is likely soon as the US Bureau of Labor Statistics (BLS) is set to release official labor market data for September on Thursday.
- The impact of official employment data will be important on market expectations for the US dollar and the Federal Reserve (Fed) monetary policy outlook, as major economic releases were put on hold due to the government shutdown.
- Ahead of US Nonfarm Payrolls (NFP) data, Fed officials are expressing rising job market risks. On Monday, Fed Governor Christopher Waller said the US central bank should cut interest rates at its December meeting, citing a slowdown in the hiring trend.
- “I’m hearing that companies are paying for AI investments by not hiring, and companies saying that low- and middle-income families are not spending, which is hurting hiring, which makes the case for continuing to cut interest rates,” Waller said.
- Similarly, Fed Vice Chairman Philip Jefferson also warned of the risks of a decline in employment, but cautioned on further rate cuts, saying that policy is somewhat closer to the neutral level. “The balance of risks has shifted in recent months, increasing the likelihood of a decline in employment, but the Fed needs to move slowly as monetary policy approaches the neutral rate,” Jefferson said at an event hosted by the Fed Bank of Kansas City.
- At press time, the US Dollar Index (DXY), which tracks the value of the greenback against six major currencies, was trading near 99.45 with a slight decline. The USD index rose sharply on Monday as traders reduced bets favoring another interest rate cut this year. According to the CME FedWatch tool, the probability of the Fed cutting interest rates by 25 basis points (bps) at its December meeting to 3.50%-3.75% has dropped to 43% from 62.4% seen a week earlier.
Technical Analysis: USD/INR holds above 20-day EMA
USD/INR has remained below 89.00 for more than two weeks. The 20-day exponential moving average (EMA) near 88.70 continues to act as a key support for the USD bullish momentum.
The 14-day Relative Strength Index (RSI) is struggling to return above 60.00. If the RSI (14) succeeds in doing so, a new bullish momentum will emerge.
Looking below, the August 21 low of 87.07 will act as key support for the pair. On the positive side, the all-time high of 89.12 will be a significant hurdle.
Tariff FAQ
Tariffs are customs duties imposed on certain merchandise imports or a range of products. Tariffs are designed to help local producers and manufacturers become more competitive in the market by providing a price advantage over similar goods that could be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.
Although tariffs and taxes both generate government revenue to finance public goods and services, they have several differences. Tariff is paid at the port of entry, while tax is paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.
There are two schools of thought among economists regarding the use of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially raise prices in the long term and lead to harmful trade wars by encouraging tit-for-tat tariffs.
During the presidential election in November 2024, Donald Trump made it clear that he intended to use tariffs to support the US economy and American producers. In 2024, Mexico, China, and Canada accounted for 42% of total US imports. During this period, Mexico emerged as the top exporter with $466.6 billion, according to the US Census Bureau. Therefore, Trump wants to focus on these three countries when imposing tariffs. He also plans to use the revenue generated through tariffs to reduce personal income taxes.
