Rupee on a Rollercoaster: US Tariff Twists and RBI’s Bond Boost

The Indian rupee is bracing for a volatile week as US tariff policy keeps global markets on edge. Despite a battered dollar offering some relief, the rupee closed last week at 86.04, down 0.9%, and traders expect it to swing between 85.70 and 86.70 in the coming days. Over the weekend, the US exempted smartphones and computers from new tariffs, but President Trump’s warning of future levies and a 90-day postponement of most global tariffs have left investors jittery.

Meanwhile, the Reserve Bank of India (RBI) is stepping in to steady the ship. After a second consecutive rate cut and a shift to an “accommodative” stance, the RBI is signaling more easing ahead. This, combined with central bank bond purchases, is expected to push government bond yields lower, with the 10-year yield already dipping to 6.44%. Analysts say the RBI’s moves, coupled with benign inflation and global uncertainty, could trigger a deeper rate cut cycle to support growth.

All eyes are now on upcoming inflation data and the next round of US-India trade talks, as the rupee and bond markets navigate a landscape shaped by tariff tremors and central bank action.

Sources: Economic Times, Reuters