Rupee Gains On Softer Crude & RBI Support, Trade Worries Loom As US Tariffs Hit Sentiment

Key Highlights:

- Rupee closed at 87.53, up 12 paise from Thursday.

- US imposes 25 percent tariff on Indian exports, effective August 7.

- Sensex dropped 586 points; FII outflows continued.

Mumbai: On Friday, the Indian rupee strengthened by 12 paise to close at Rs 87.53 against the US dollar. This small recovery came after a tough week in the currency market. Traders said the gain was supported by falling crude oil prices and possible intervention by the Reserve Bank of India (RBI).

The rupee had earlier touched an intra-day high of 87.20, after opening at 87.60. Just a day before, on Thursday, the rupee had recovered 15 paise from an all-time low to end at 87.65.

New US Tariffs Create Tension

The US government, led by President Donald Trump, has imposed a 25 percent tariff on Indian exports, which takes effect on August 7. This announcement triggered fresh concerns in the global markets, including India. On top of that, a penalty was also added on India’s purchases from Russia.

These actions led to what experts called a "risk-off sentiment," where investors become cautious and reduce exposure to riskier markets like India.

RBI Seen Stepping In as Oil Prices Fall

The rupee’s partial comeback is being linked to lower oil prices, with Brent crude slipping to USD 71.48 per barrel. Experts also believe that the RBI may have intervened in the forex market to stop further rupee decline, especially since it had hit record lows earlier.

Despite these efforts, analysts are cautious. According to Anuj Choudhary of Mirae Asset Sharekhan, "We expect the rupee to remain weak," especially if there are more foreign investment outflows and ongoing trade concerns.

Stock Market Slides on Weak Sentiment

India’s stock market also took a hit. The Sensex fell by 585.67 points, ending the day at 80,599.91, while the Nifty dropped 203 points to 24,565.35. Foreign investors (FIIs) sold shares worth Rs 5,588.91 crore on Thursday alone.

Positive Signs in Manufacturing, But Fiscal Deficit Rises

There was some good news on the economic front. India’s manufacturing activity hit a 16-month high in July, with the HSBC PMI rising to 59.1, showing strong demand and output.

However, the government’s fiscal deficit stood at Rs 2.8 lakh crore in the April–June period, which is 17.9 percent of the full-year target, suggesting higher spending or slower revenue collection compared to the same period last year.

(With PTI Inputs)