The Indian rupee opened 4 paise weaker at 88.2450 on September 1 after breaching the 88/USD mark on Friday to test a new low, weighed down by tariff-related uncertainty, month-end dollar demand and foreign outflows.
The rupee's slide past 88 surprised several market participants, who were expecting the Reserve Bank of India to step in more emphatically. Money market experts now fear the Rupee could stay under further pressure going forward. "The Indian rupee could remain under pressure as the tariffs from US and outflows from FPIs pile pressure and Government bonds fall after consistent outflows with yields to 10-year rising to almost 6.70 percent before closing at 6.57 percent," said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.
"For USD INR, 87.75 acts as a support while 88.50 a resistance," said Kunal Sodhani, Head of Treasury at Shinhan Bank.
"The next focus for markets is identifying the level where the RBI signals it will not tolerate further losses," Reuters reported quoting a treasury official with a mid-sized bank.
Traders are assessing Friday’s US PCE price data and a court ruling that said most of Trump's tariffs are illegal, as well as US President's ongoing tussle with the Federal Reserve over attempts to replace Governer Lisa Cook, currency experts said.
On Friday, the US Court of Appeals for the Federal Circuit ruled in a 7-4 decision that Trump exceeded his authority when he invoked emergency powers to slap tariffs on foreign imports.
The judges concluded that the International Emergency Economic Powers Act (IEEPA) does not permit the kind of broad tariffs Trump enacted earlier this year. The unsigned opinion upheld a lower court’s decision and described his move as an unprecedented overreach of executive authority.
The ruling stressed that under the US Constitution, the power to levy taxes and tariffs rests primarily with Congress, not the executive branch.
US President Donald Trump has staunchly defended his tariff policies, framing them as essential for both America’s economic stability and military might.
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