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Indian Rupee Faces Pressure Amid Global Market Selloff

MUMBAI (Reuters) – The Indian rupee is expected to decline at the start of trading on Monday, influenced by significant selloffs in Asian equity markets. This turmoil stems from increasing apprehensions that U.S. tariffs might trigger a global economic slowdown.

According to the 1-month non-deliverable forward contracts, the rupee is projected to open at around 85.75-85.80 against the U.S. dollar, a marked decline from the previous close of 85.2350.

A currency trader at a Mumbai bank remarked, “The rupee had so far been resilient against the turmoil caused by tariffs, but that scenario appears to be changing now.”

The persisting risk aversion in the markets will likely support the initial rise in the dollar-rupee exchange rate and could potentially escalate, according to market analysts.

Futures for the S&P 500 Index fell by 2.5%, continuing a downward trend characterized by a notable 10% selloff over the last two days due to the reciprocal tariffs imposed by the U.S. President.

Equity markets in Hong Kong were particularly hard-hit, plunging 9%, while stocks across Australia, South Korea, Japan, and China experienced declines between 4% and 7%.

In a flight to safety, investors have turned towards U.S. Treasury securities, resulting in decreased yields, and have also boosted the value of the Japanese yen.

Amid growing anxieties that the newly announced U.S. tariffs will ignite inflationary pressures and lead to sluggish global growth, many investors are withdrawing funds from high-risk assets and seeking refuge in safer investments.

White House officials have not indicated any intention to retract the broad tariff proposals introduced last week, prompting a widespread sell-off in riskier assets as investors seek safe havens.

On Sunday, President Trump expressed that investors needed to “take their medicine” and emphasized that a deal with China would not proceed until the U.S. trade deficit is addressed.

ANZ Bank highlighted in a note that “the greatest threat to the global goods trading system since World War II” is likely accelerating a rapid de-leveraging of risk assets and escalating recession fears.

The bank cautioned that it is uncertain where this “self-reinforcing downward spiral” might end unless opportunities for negotiations become available soon.

Key Economic Indicators

** The one-month non-deliverable rupee forward is pegged at 86, with an onshore one-month forward premium of 20.75 paise.

** The dollar index has risen to 103.15. ** Brent crude futures decreased by 2.9%, settling at $63.7 per barrel. ** The yield on ten-year U.S. notes has fallen to 3.93%. ** On April 3, foreign investors sold a net total of $345.4 million worth of Indian equities, according to NSDL data.

** In addition, NSDL data reveals that foreign investors disposed of a net $136.9 million in Indian bonds on the same date.

(Reporting by Nimesh Vora; Editing by Janane Venkatraman)

Source
finance.yahoo.com