The Indian rupee is expected to react to the new US tariffs, which could impact global trade and economic growth. Meanwhile, government bond yields are likely to decline, influenced by investor sentiment and economic conditions.
The US government is set to introduce reciprocal trade levies on April 2. These tariffs, promised by President Donald Trump, aim to match duties imposed on US exports by other nations. Investors are closely watching how these new measures will influence global trade and, in turn, affect the Indian rupee.
Last week, the rupee closed at 85.47 against the US dollar, gaining 2.3% in March due to strong dollar inflows. Despite outperforming regional currencies and achieving its highest monthly gain in over six years, challenges remain. The uncertainty surrounding US trade and tariff policies poses risks to India’s external sector balance, according to Kotak Institutional Equities.
Analysts forecast the USD/INR exchange rate to remain in the range of 85-89 in the financial year 2026. However, these projections could change depending on the final tariff details and subsequent market reactions.
The Reserve Bank of India (RBI) has allowed a more flexible rupee movement, benefiting from recent dollar weakness. However, if trade policies create a negative impact, the RBI might intervene. A Mumbai-based trader noted that the RBI could permit a significant rise in USD/INR if unexpected market shocks emerge.
Aside from trade policies, key US economic data and Federal Reserve policy statements will also influence forex movements this week. Any shifts in US interest rates could further impact the rupee’s trajectory.
Traders anticipate Indian government bond yields to remain within 6.52%-6.60% this week. On Friday, the 10-year bond yield closed at 6.5823%, dropping 4 basis points over the week. In March, bond yields saw a 15 bps decline, the most significant drop in 10 months.
This downward trend is driven by large foreign inflows and a dovish stance from global central banks, encouraging investor demand for Indian debt securities. Market sentiment suggests that the bullish bond trend could continue as investors speculate on an additional RBI rate cut.
The RBI’s next monetary policy meeting is scheduled for April 9. Many economists expect one more rate cut in August, marking one of the shortest easing cycles in history.
Market optimism remains high as India’s inflation rate dropped to 3.61% in February, the lowest since July 2024. Investors anticipate another benign inflation reading for March, reinforcing confidence in further rate cuts. A lower debt supply from the central government is also expected to impact bond market trends in the upcoming months.
The Indian rupee faces a crucial week, with US tariff policies, RBI intervention, and bond market trends shaping its trajectory. Investors must stay updated on forex movements and bond yield fluctuations.
Don't miss out on the latest Forex trading news and in-depth market analysis. Visit our website for expert insights: FIXIO Markets.
The Indian rupee faces volatility amid US tariffs and shifting bond yields. Stay updated on forex trends and market analysis.
Superior trade execution & trading conditions with the NDD method.
The online FX industry provides a platform for investors worldwide to engage in the buying and selling.
Subscribe to our daily newsletter and get the best forex trading information and markets status updates
Trade within minutes!
日本語
English
Comment (0)