The rupee went up a little in early trading on Tuesday. It reached 85.71 against the US dollar by 10:25 a.m. IST, gaining 0.16%. This small move was in line with other Asian currencies that also rose.
But Indian traders are still playing it safe. Why? Because US President Donald Trump just gave the world a fresh dose of trade tension.
Trump has delayed his plan to add high tariffs on imports from 14 countries, including India. These tariffs will now start from August 1. That gives countries a few weeks to talk and try to avoid the new taxes.
Trump said he is close to making a deal with India. But markets are not sure what will really happen. So even though the rupee gained today, the mood in the market is still tense.
One trader at a private bank said many were shocked by the rupee’s big drop on Monday. The local currency fell by 0.7% after Trump warned about a 10% tariff on BRICS countries. That includes Brazil, Russia, India, China, and South Africa.
Because of that, traders are not rushing to take big bets. They don’t want to get caught again if the rupee suddenly drops.
Analysts from MUFG gave an interesting take. They called this the “TACO” trade. That stands for “Trump Always Chickens Out.” They believe the market is hoping Trump will change his mind again.
Still, the fear is real. A Reuters report said these tariffs will only happen if countries take “anti-American” actions. But that’s a grey area. No one knows what counts as anti-American.
The rupee is now dancing to the tune of global politics. A small gain like today doesn’t mean things are stable. The next few weeks will be key. Talks between India and the US could shape how the rupee moves.
For now, traders are watching every headline. One strong word from Trump could shake up everything again.
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