Rupee holds its own amid Trump tariff hike, traders say ‘had factored it in’

The Indian rupee was moving within a narrow range and went up by marginally, by 5 paise, to 87.67 against the US dollar in early trade on Thursday. This was even after US President Donald Trump slapped an additional 25 per cent tariffs, taking the total to 50 per cent, on India over its imports of Russian oil.

"The rupee's measured response to the new tariffs likely reflects the Reserve Bank of India's (RBI) resolve to prevent a breach of the all-time low of 87.95," says a trader.(Reuters)

The 25 per cent announced earlier has now come into effect, while the “penalty” 25 per cent kicks in later this month.

But currency traders had already said the rupee won't be hit badly for now as Trump's move was largely expected and factored in, Reuters reported.

Also read | Indian stock market opens in red after Donald Trump's 50% tariffs on India

On Wednesday, the prediction was that the rupee will open in the 87.70-87.75 range, largely unchanged from Wednesday's close of 87.73.

"We knew more tariffs were coming after all those hints by Trump," a currency trader at a private sector banks told Reuters.

The rupee's measured response to the new tariffs likely reflects the Reserve Bank of India's (RBI) resolve to prevent a breach of the all-time low of 87.95, the trader was further quoted as saying.

Benchmark equity indices on the BSE and NSE, however, tumbled in early trade on Thursday as investor sentiment took a hit following Trump's decision to impose an additional 25% tariff on exports from India.

Experts have started flagging the possible long-term effects of the tariff escalation. “If tariffs persist for a year, the impact on India’s GDP growth will be around 30 to 40 basis points,” Dhiraj Relli, CEO of HDFC Securities, told Reuters.