Mumbai: The rupee is likely to open stronger against the US dollar on Monday after the US Supreme Court struck down President Donald Trump’s tariffs, prompting a recalibration of the North American country’s trade policy and reducing India’s effective tariff exposure to 15% from 18%.
However, traders believe any near-term appreciation may be modest and short-lived, given lingering policy uncertainty and month-end dollar demand.
Currency traders expect a positive bias at open on Monday, tracking gains in the offshore non-deliverable forwards (NDF) market on Friday. The rupee had appreciated from 90.95 to around 90.75 in offshore trade.
“I think already in the NDF, maybe it was trading a little better. So, this news will make a difference. It will have a positive bias and expect the rupee to open stronger on Monday,” Shailendra Jhingan, treasury head at ICICI Bank, said.
Market participants remain cautiously optimistic and expect the rupee to strengthen further towards the 89.00-89.50 range by the end of March.
On Friday, the Indian unit closed at 90.99 against the greenback. Most traders are expecting the rupee to appreciate by around 25 paise at least, and could rise by as much as 30-40 paise on Monday on this development.
“Yes, the rupee has appreciated from 90.95 to 90.75 levels in the NDF markets on Friday, so we might see a gap down towards 90.70-90.75 levels on Monday,” Ritesh Bhansali, deputy chief executive officer at Mecklai Financial Services.
The ruling came just over one year into Trump’s second term and is set to immediately halt a major section of Trump’s tariffs, which were announced last year under the 1977-era International Emergency Economic Powers Act (IEEPA).
“IEEPA does not authorize the President to impose tariffs,” read the decision, written by US chief justice John Roberts.
Constitutional check on trade
In his first response on Friday, Trump attacked the supreme court and hinted that his administration would pursue alternative methods for implementing its trade goals by imposing a 10% ‘global tariff’ under Section 122 of the Trade Act of 1974. Then on Saturday, he raised the levy to 15%.
The development comes after India had already signed a trade deal with the US on 2 February, and tariff rates on Indian goods had been reduced to 18% from the 50% rate imposed in August 2025.
“While the judgment reinforces constitutional limits and reduces the risk of sweeping unilateral tariffs, the new levy means trade policy uncertainty has not fully dissipated,” Anil Rego, founder and fund manager at Right Horizons PMS, said.
Therefore, market participants remain cautious about the sustainability of any rally.
“I don’t think the rupee would appreciate much. There are a lot of other factors also at play right now. So, there could be some mild appreciation, but how long it will sustain, we don’t know,” Rajeev Pawar, head of treasury at Ujjivan Small Finance Bank, said.
He flagged month-end dollar outflows and US trade policy uncertainty as other factors. “The market will be a bit cautious given that Iran-US tensions are also still live and could impact oil.”
While Gaura Sengupta, chief economist at IDFC FIRST Bank, also expects a positive reaction in the currency markets from this news, she said any rally will be short-lived, as the US government may impose tariffs under other sections, such as Section 301, on unfair trade practices.
The rupee had depreciated about 6% last year amid global dollar strength and persistent outflows. Monday’s opening may offer near-term relief, but traders say durability will hinge on clarity around US tariff policy and domestic liquidity.
Key Takeaways
- The US Supreme Court has ruled that President Trump lacks the legal power to impose high trade taxes.
- Due to this ruling, the rupee is expected to gain value and strengthen when markets open on Monday.
- The tax on India’s exports to America is dropping from 18% to 15%, making Indian products a bit cheaper there.
- Even though Trump lost in court, he is already exploring new ways to keep those 15% taxes in place.
- The rupee might not remain strong for long, as big Indian companies still need to buy a lot of dollars at the end of the month.
