The Indian rupee opened 1 paise lower on Thursday after the government cut the Goods and Services Tax on small cars, televisions, air conditioners, textiles, and a range of household goods effective September 22.
The local currency opened at 88.0813 against the US dollar, compared with 88.0700 against the greenback at the previous close.
"Global factors — including mixed U.S. data, potential Fed rate cuts, and lingering trade risks — are keeping the dollar on edge, while robust Indian economic indicators continue to lend support to the rupee," said Amit Pabari, Managing Director at CR Forex Advisors.
The GST cut is aimed at spurring consumption ahead of the festive season, even as Trump’s tariffs threaten the country’s exports.
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The 56th meeting of the GST Council on Wednesday, chaired by Finance Minister Nirmala Sitharaman and comprising state ministers, approved a two-tier rate structure of 5 percent and 18 percent.
Addressing reporters after the meeting, Finance Minister Nirmala Sitharaman said the changes were introduced keeping the interests of the common man and the middle class in mind. "Items on which GST has been reduced to 5 percent include hair oil, toilet soap, soap bars, shampoos, toothbrushes, toothpaste, bicycles, tableware, kitchenware, and other household articles."
"We expect a range of 87.90 to 88.40 today for the domestic currency against the US dollar," said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.
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