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Rupee Recovers: Trump's Tariff Pause Boosts Indian Currency
22 Jan
Summary
- Indian rupee halted a six-day decline, showing mild recovery on Thursday.
- Improvement in risk appetite followed U.S. President Trump's tariff threat withdrawal.
- Foreign investors have withdrawn nearly $3 billion from Indian equities this month.
The Indian rupee halted its six-day declining trend on Thursday, staging a modest recovery. This positive movement was largely driven by an improved global risk appetite, which emerged after U.S. President Donald Trump signaled an end to tariff threats against Europe related to Greenland.
The rupee opened higher against the dollar but saw some gains evaporate as it struggled to surpass the 91.50 per dollar mark, eventually closing at 91.63. This recovery followed a significant 0.8% plunge to an all-time low of 91.7425 per dollar the previous day, despite intervention from the central bank.
Analysts noted that Trump's remarks eased fears of a wider U.S.-Europe trade dispute, providing temporary relief to emerging market currencies. However, ongoing delays in a U.S.-India trade agreement and consistent demand for dollars from importers continue to exert downward pressure on the rupee, with foreign investors withdrawing approximately $3 billion from Indian equities in the current month.
