US tariffs timeline delay sparks dollar slump, may lift rupee

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US tariffs timeline delay sparks dollar slump, may lift rupee

By Nimesh Vora

MUMBAI (Reuters) – The Indian rupee is poised to open slightly higher on Friday, tracking an uptick in its Asian peers on relief that U.S. President Donald Trump reciprocal tariff’s plan will not be implemented till later.

The one-month non-deliverable forward indicated the rupee will open at 86.80-86.85 per U.S. dollar, compared to 86.8975 in the previous session. Despite the dip at open in the dollar/rupee pair, traders remained wary. “Do not expect it to sustain,” said a currency trader at a bank.

Trump tasked his economic team to draft plans for reciprocal tariffs on all nations imposing taxes on U.S. imports. Howard Lutnick, Trump’s pick for commerce secretary, said the administration would address each affected country one by one and said studies on the issue would be completed by April 1.

Asian currencies rose on the tariffs not being imposed immediately.

The “near-term delays in tariff implementation” put the dollar under pressure, MUFG Bank said in a note.

The dollar index dropped 0.8% to slip to its level lowest in more than two weeks. U.S. Treasury yields dropped and Wall Street rallied. The Korean won was the top performer in Asian currencies on Friday.

The dollar was already struggling before the Trump’s tariffs announcements, thanks to the U.S. wholesale inflation data. The data indicated that the core PCE inflation is likely to be lower than previously expected.

The data came a day after the U.S. consumer price index rose more than expected.

While the headline U.S. producer price index came in higher than expected, the components which feed into core PCE – the key inflation measure the Federal Reserve targets – were softer and will likely lead to a more benign PCE inflation print than the CPI numbers suggest, MUFG Bank said.

KEY INDICATORS:

** One-month non-deliverable rupee forward at 87.01; onshore one-month forward premium at 22 paise

** Dollar index up at 107.1

** Brent crude futures up 0.2% at $75.2 per barrel

** Ten-year U.S. note yield at 4.53%

** As per NSDL data, foreign investors sold a net $561.4mln worth of Indian shares on Feb. 12

** NSDL data shows foreign investors bought a net $41.6mln worth of Indian bonds on Feb. 12

(Reporting by Nimesh Vora; Editing by Rashmi Aich)

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