Indian rupee opens 4 paise lower at 87.70 against US dollar on China tariff truce extension

Indian rupee

Indian rupee opened 4 paise lower after a US-China tariff truce provided relief to markets ahead of a crucial US inflation report that is expected to influence the Federal Reserve’s interest rate decisions.

The local currency opened at 87.70 against the US dollar, as compared to 87.66 against the greenback at previous close.

US President Donald Trump on Monday signed an executive order to extend the China tariff deadline by an additional 90 days, CNBC reported, quoting a White House official confirming the development.

The order followed a non-committal answer by Trump to reporters as to whether he would extend the lower tariff rates a day after he urged Beijing to quadruple its purchases of US soybeans.

The tariff truce between Washington and Beijing was scheduled to expire at 12:01 AM on August 12 (04:01 GMT), but the Trump administration had indicated the possibility of an extension.

This extension of the deadline follows the recent round of trade negotiations between US and Chinese officials held last month in Stockholm.

Further, US CPI inflation data will draw far more investor attention than usual. Headline and core CPI inflation is expected to tick higher on an annualized basis, and investors will be hoping that an inflation upswing will remain slim enough to not knock the Fed off of its current trajectory on rate cuts, said Kunal Sodhani, Head of Treasury at Shinhan Bank.

"In the near term, the spot USD/INR pair faces resistance at 87.85 and has a support level at 87.50," said Dilip Parmar – Senior Research Analyst, HDFC Securities.