Rupee logs worst week in a month as US visa, tariff policies sting

By Jaspreet Kalra

MUMBAI (GWN) – The Indian rupee hit an all-time low and remained persistently under stress this week, damage by worries over how U.S. tariffs and adjustments in immigration coverage may dent commerce, remittance and overseas portfolio flows into India.

The rupee closed at 88.7175 against the U.S. greenback on Friday, little modified on the day but down 0.7% on the week, its steepest weekly fall since late August.

At the start of the week, the rupee was troubled by a sharp hike in U.S. visa H1-B charges which may dent long-standing business fashions of local IT companies. A recent tariff salvo from the White House – 100% levy on branded and patented medicine – in direction of the end of the week sparked headwinds as effectively.

India’s benchmark equity indexes, the BSE Sensex and Nifty 50 ended the week decrease by 2.5% each, their steepest drop since late-March.

Market interventions by the Reserve Bank of India helped protect the rupee from steeper losses this week even as it hit an all-time low of 88.7975 earlier on Tuesday.

Traders and analysts reckon that the RBI could also be open to permitting the rupee to weaken regularly but is unlikely to let volatility rise sharply.

“The RBI’s tolerance for a weaker INR does not mean the central bank is absent from the FX market. It has been selling FX reserves, but largely to contain market volatility,” analysts at ANZ said in a be aware.

A weaker spot INR coupled with low home inflation imply the currency’s competitiveness has improved, which may mitigate the influence of increased tariffs to a restricted extent, the be aware said.

India’s central bank will release data on the nation’s overseas exchange reserves on Friday, which have been last at practically $703 billion as of September 12 – in touching distance of their all-time peak.

Elsewhere, the main focus is on U.S. personal consumption expenditure (PCE) data due later in the day for cues on the future path of U.S. coverage charges. The greenback index was last regular at 98.4.

(Reporting by Jaspreet Kalra; Editing by Janane Venkatraman)