New Delhi: Shouldering relentless pressure from the US dollar, the Indian rupee has, over the past several days, become one of the strongest-performing currencies. The rupee is maintaining its position in interbank transactions even as crude oil prices skyrocket in the world markets.
Despite the closure of the Indian forex markets on Wednesday, the interbank exchange rates showed a strengthening of the rupee compared to Tuesday’s close. At the same time, stock markets have also gone up with the prevailing economic sentiment.
Tesla’s Entry in India, Its Trump Tariffs (Just Make Your Electric Car)
The confirmation of the reports of Tesla coming to India has reaffirmed the gain of the rupee. Investors are now feeling bullish, due largely to the assumption that the former US president Donald Trump’s tariffs may not affect India adversely. Besides, the ongoing fall in the US Dollar Index is supporting rupee strength with the index falling below the 107 mark. The rupee has gained about 1.5% against the dollar since 12th February.
This information is based on data from IBRLive. The data comes directly from the source. The rupee witnessed a phenomenal rally against the dollar and was trading at around 86.85 by noon on Wednesday, which is a gain of 13 from Tuesday’s closing. The rupee started at 86.89 well and marked the day high at 86.83, producing an ample bull run. Even with minor corrections witnessed in the past two days, the rupee had continued to show an upward movement, as per experts.
Trends of Interbank Foreign Exchange
The Indian rupee slipped 10 paise to close at 86.98 per dollar in firm trade on Tuesday, inflating crude oil prices and an uptick in the US Dollar Index. According to market experts, the rupee is trading with a negative bias, with the support of the Reserve Bank of India (RBI) expected to decrease in the future.
The rupee opened at 86.94, moved between a high of 86.91 and a low of 86.98, before settling at the lowest price of the day. The rupee had settled at 86.88 per dollar on Monday, a day that witnessed a 17-paise fall. According to analysts, India’s increasing trade gap continues to cast a shadow on the currency, which they attributed to this pressure.
The Stability Offered By Trump Tariffs And EV Policy In India Will Play Big For Rupee
Trump’s potential reduction of tariffs on India has been a major factor in the rupee’s recovery. An announcement of recruitment and new showrooms in Mumbai and Delhi by Tesla CEO Elon Musk has revived confidence in the market. Tesla’s expansion in India is interpreted by analysts as an indication that tariffs in the Indian economy are decreasing.
Secondly, clarity on policy has emerged post Prime Minister Narendra Modi’s visit to the US. India’s previous announcements of tariff reductions and one of the most generous incentive plans for EVs have also supported the rupee. Such measures, experts say, will continue to give the currency an upturn.
Decline of Dollar Index Provides Additional Aid
The US Dollar Index’s weakness also supported the rupee’s rise. The US Dollar Index is at a daily low of 106.89, having fallen 0.15%. The Dollar Index fell nearly 1% in the last five sessions, and over the last month, the index posted a 1.18% loss. It has dropped around 1.5% since the start of the year.
Traders claim that the recent easing of the dollar’s weakening by the Fed has led to a surge in the value of the currency. This further fall in the Dollar Index is adding extra tailwind for the rupee and keeping it in the bullish trajectory that it took a couple of weeks ago.
OUTLOOK: Will the rupee be able to hold its ground?
The rupee has gained recently, which is quite significant, as global financial markets react to a changing of economic policies and fluctuating currencies. Short-term corrections may come, but the strength of the currency against the dollar, which is currently bolstered by favourable domestic policies and the entry of Tesla into the market, may keep it upward moving in the weeks ahead.
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