Rupee Falls 41 Paise Against USD, Worst Single Day Drop in a Month
Investor uncertainty and US-India trade talks fuel rupee volatility ahead of key inflation data.
Mumbai: The Indian rupee fell by 41 paise (0.47 per cent) to close at 87.36 against the US dollar on Monday, marking its steepest single-day drop in over a month since February 5 amid worries about the United States' statements on tariffs on Indian exports to the US. The depreciation occurred despite the dollar index and crude oil prices reaching four-month and 22-month lows, respectively.
“Investor uncertainty led to increased demand for the US dollar as a safe haven asset. Additionally, India’s ongoing negotiations for a bilateral trade agreement with the US also contributed to market volatility. Market participations are now closely monitoring consumer inflation data from both India and the US, set to be released on Wednesday, as this will influence expectations of rate cuts by the countries' central banks,” said Rahul Kalantri, vice president of commodities at Mehta Equities.
At the interbank foreign exchange, the rupee opened weak at 87.24 and touched the day's low of 87.36 amid intense volatility. The unit touched an intraday high of 87.16 before ending the session at 87.33 (provisional) against the greenback, registering a loss of 38 paise from its previous closing level. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading lower by 0.15 per cent at 103.65.
“We expect the rupee to remain volatile this week amid volatility in the dollar index and volatility in the global financial markets and the pair could trade in the range of 86.90 to 87.70,” added Kalantri.
The US Feb Jobs report on Friday was underwhelming. Headline Non-Farm Payrolls, a key economic indicator in the United States, came in at 1,51000 against expected 160000. The unemployment rate came in at 4.1 per cent against expected 4 per cent. The US Feb CPI print is due on Wednesday this week. Meanwhile, US President Donald Trump dodged questions on fears of a recession possibility in 2025 saying that while the economy could be in a transition phase due to tariffs, he hated to predict things.
