Indian rupee unchanged at 23.8 to dirham despite Trump's new tariff warning

Dubai: The Indian rupee has so far seen no immediate impact from US President Trump saying last evening there will be an additional 25% tariff on India if it did not stop buying oil from Russia.

The rupee is at 23.86/23.87 to the dirham when the currency market opened, which is more or less unchanged from yesterday’s levels.

As for Indian expats in the UAE, they have been enjoying highly favourable exchange rates to the dirham over the last few days. In the first 7 days of August, there has already been higher than average remittances to India. These could have been even higher but many UAE NRIs are on their summer holidays abroad.

“So far, the doubling of Trump’s tariffs on India has not rattled the Indian rupee,” said an FX trader. “The real action will begin only if the rupee falls past 23.94, which is the current lowest.” (This week, there had been a brief phase when it had been 23.92.)

It was on Wednesday (August 6) that Reserve Bank of India decided to not go in for a further interest rate cut. At the time, the central bank's Governor Sanjay Malhotra had said: "It's really very difficult to predict as to what the impact will be.

"On growth, we had already reduced reduced our forecast - 6.7% to 6.5%..." (This was said before the additional 25% tariff warning from Trump.)

But Indian investors have shrugged the combined 50% burden on US exports.

The same sentiments are in play on the Indian stock markets - the BSE Sensex is down 0.3% to 80,304 points at 8:25am UAE time, while Nifty is at 24,505.95, down 0.28%.

By 2:30pm UAE time, the Sensex was in the green, albeit marginally.

"The Indian markets remain range-bound while they continue to defend key support levels," said Milan Vaishnav, founder of CharterWizard.ae.

"We need to get concerned only if Sensex violates the important 80,000 level.

"The key indices - Nifty 50 and BSE Sensex - opened lower, but were soon off their opening lows. Both have defended their key support zones of 24,300-24,500 in the case of Nifty, and 79,500-80,000 for BSE Sensex."

The IT, pharma, media and FMCG sectors are showing 'good relative strength', while the auto, real estate, and Metal sectors are showing 'mild weakness as of now'.