The Indian rupee opened flat and weakened by 5 paise on September 26 after US President Donald Trump announced fresh tariffs on import of branded or patented pharmaceutical products.
The local currency opened at 88.6875 against the US dollar but soon weakened to 88.72 against the greenback as compared to 88.6725 against the greenback at previous close. The rupee has been under pressure this month, slipping 0.5 percent so far in September, with foreign investors having already sold $1.3 billion worth of equities so far this month.
Asian currencies too are trading weaker against the dollar, with Taiwanese Dollar down by 0.42 percent, Thai Baht down by 0.26 percent, Malaysian Ringgit down by 0.21 percent, and South Korean Won by 0.12 percent, as per Bloomberg data.
"Looking at Asia specifically, it is still unclear how branded or patented pharmaceutical products will be defined, but our working assumption is that this will not incorporate generic drugs and pharmaceutical shipped by the likes of India to the US. As such, India could be spared from these announcements – perhaps for now.," Japan-based financial group Mitsubishi UFJ Financial Group (MUFG) said in a note.
Amit Pabari, managing director at CR Forex Advisors said the USD/INR is testing key levels, with resistance at 89.00–89.20 and support at 88.40. "The up move appears driven more by tariffs and visa fee hikes than by broad dollar strength. A close below 88.20 would mark the first signal of a potential trend reversal, while progress on trade talks or a softer dollar index could support a rupee rebound."
Forex market participants believe the Reserve Bank of India is expected to intervene to arrest further weakness in rupee, if it weakens to the 89/dollar mark. The RBI likely intervened to support the rupee on September 25, reported Reuters citing currency market traders.
Earlier, US President Trump announced a 100% tariff on imports of branded or patented pharmaceutical products starting October 1, unless the company start manufacturing in America. The US accounts for over a third of India's pharma exports, primarily in the form of cheaper generics of popular drugs.
“Starting October 1st, 2025, we will be imposing a 100% Tariff on any branded or patented Pharmaceutical Product, unless a Company IS BUILDING their Pharmaceutical Manufacturing Plant in America,” Trump wrote on Truth Social.
He added, “There will, therefore, be no Tariff on these pharmaceutical products if construction has started."
The announcement also covers other imports. Trump said a 50% tariff will be applied to kitchen cabinets, 30% to upholstered furniture, and 25% to heavy trucks.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
