NEW DELHI (dpa-AFX) - The Indian rupee strengthened against the U.S. dollar in the Asian session on Thursday, as the monetary policy outlook from the Reserve Bank of India (RBI) helped the Indian currency amid rising trade tensions with the United States (US).
U.S. President Donald Trump signed an executive order imposing an additional 25 percent tariff on India as a 'penalty' in response to its continued purchase of Russian oil.
While the initial 25 percent duty comes into effect today, the additional U.S. import tax will take effect in 21 days.
On Wednesday, U.S. President Donald Trump raised the import duty on goods from India to 50%, a decision that investors had already expected since he indicated on Tuesday that he would further increase tariffs on New Delhi for purchasing oil from Russia.
At the same time, expectations for a US-India trade resolution have diminished as Indian Prime Minister Narendra Modi stated that he 'refuses to sacrifice farmers' interests and is willing to accept an additional 25% tariffs on exports to the US,' while speaking to the audience at the MS Swaminathan Centenary International Conference, according to CNBC.
Against the U.S. dollar, the rupee rose to a 3-day high of 87.62 from yesterday's closing value of 87.72.
If the rupee extends its uptrend, it is likely to find resistance around the 86.00 region.
Looking ahead, the Bank of England is set to announce its decision at 7.00 AM ET in the European session. The bank is widely expected to cut its interest rates for the fifth time in a year to support the economy even as inflation continued to stay stubbornly above the target. The bank will also publish its quarterly monetary policy report along with the policy statement.
Markets anticipate a quarter-point cut, bringing the bank rate to 4.00 percent, which will be the lowest since early 2023.
The bank has shifted its focus on supporting the economy as it faces challenges from the labor market, geopolitical tensions and tariff uncertainty.
In the New York session, U.S. weekly jobless claims data, Canada Ivey PMI for July, U.S. wholesale inventories for June, U.S. consumer inflation expectations for July and consumer credit change for June are slated for release.
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