The Indian rupee is expected to open higher against the dollar after President Donald Trump deferred the implementation of tariffs on some Chinese products, prompting a broad rally in Asian currencies and equities. The rupee likely to open around 70.95-71.05 compared with its previous close of 71.40.
The Chinese yuan led Asian currencies higher on Wednesday after Washington delayed enacting tariffs on some Chinese imports to December 15 from September 1. Yesterday the Office of the U.S. Trade Representative at the time of releasing the list of Chinese goods that would be subject to tariffs from September 1.
On account of rupee’s high correlation with the yuan currently, there will good speculative dollar selling interest in early trading. “However, the pair’s closing above 71.30 yesterday, has opened up a new uptrend. We do not see the opening decline sustaining.
Data released late yesterday showed that India’s retail inflation rate slowed to 3.15% in July from a year earlier from an eight-month high of 3.18% in the prior month.
The announcement by the USTR came after Trump earlier this month proposed levying duties on additional $300 billion of Chinese imports.On the back of the tariff delay, the S&P 500 Index closed 1.5% higher yesterday and the 10-year U.S. yield climbed 4 basis points. The Treasury yield curve, however, continued to flatten. The difference between the 2-year U.S. bond and the 10-year bond was at one point down to two basis points.
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