Rupee opens 9 paise up at 87.71 against dollar ahead of RBI's monetary policy decision

Indian rupee

The rupee opened 9 paise up against the dollar on August 6 ahead of Reserve Bank of India's (RBI) monetary policy announcement.

The currency opened at 87.71 against the dollar after ending the previous session at 87.80.

The RBI, which will deliver its interest rate decision at 10 am, is widely expected to maintain status quo.

A Moneycontrol poll of economists and treasury heads expects the Monetary Policy Committee (MPC) to hold rates steady. A pause will allow the RBI to assess incoming data on the impact of monsoons on inflation and past rate cuts on the growth trajectory, experts said.

A few experts, however, said the central bank could cut rates by 25 basis points (bps) amid a sharp drop in inflation.

The rupee will remain under pressure after US President Donald Trump on August 5 issued a fresh threat to "substantially" raise tariffs on Indian imports in the next 24 hours.

"India has not been a good trading partner because they do a lot of business with us but we don't do business with them. So we settled on 25 percent but I think I'm going to raise that very substantially over the next 24 hours, because they're buying Russian oil," he said in a interview to CNBC.

“Now I will say this, India went from the highest tariffs ever, they will give us zero tariffs….But that’s not good enough, because of what they’re doing with oil.”

Trump’s latest threat came a day after he threatened India with tariff hike, citing the country's purchase of Russian oil. He said India was "buying massive amounts of Russian oil" and selling it for "big profits."

"We wait to watch how long RBI protects rupee as Trump clamours to put additional tariffs on India today, as no solution has emerged between the two countries till now,” said Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP.

If no solution emerges then tariffs will come. Till then, the rupee is expected to remain range-bound, “with the RBI protecting 88” and FPIs continuing to buy dollars along with oil companies, Bhansali said.