MUMBAI, July 7 (Reuters) – The Indian rupee weakened on Monday, tracking losses in its regional peers on the back of uncertainty about U.S. tariff policies.
Dollar bids from a large local private bank and few foreign lenders also pressured the rupee, which declined 0.4% to 85.72 per U.S. dollar as of 10:25 a.m. IST.
The price action appears to be “flow-driven,” a trader at a Mumbai-based bank said.
India’s benchmark equity indexes, the BSE Sensex and Nifty 50, were both down 0.1%, tracking losses in regional equities sparked by confusion over U.S. tariff policies.
The United States is close to finalising several trade agreements in the coming days and will notify other countries of higher tariff rates by July 9, President Donald Trump said on Sunday, with the higher rates to take effect on August 1.
Trump also threatened an additional 10% tariff on any countries aligning themselves with the “Anti-American policies” of the BRICS group of developing nations, whose leaders kicked off a major summit in Brazil on Sunday.
Trump did not clarify or expand on the “Anti-American policies” reference.
India is among the founding members of the BRICS group and it wasn’t immediately clear if the tariff threat would impact the country’s ongoing trade negotiations with the U.S.
There is a high probability that the rupee may decline below 86-86.20 levels in the near-term, said Amit Pabari, managing director at FX advisory firm CR Forex.
The dollar index was up 0.1% at 97.1 while Asian currencies declined by 0.1% to 0.5%. (Reporting by Jaspreet Kalra; Editing by Mrigank Dhaniwala)
