Respite for rupee as dollar dives

MUMBAI: The rupee closed at 85.43 against the dollar, gaining seven paise from 85.50 on Wednesday. It had opened weaker at 86.75 after the US announced higher-than-expected tariffs on Indian imports .

"The Indian rupee strengthened after a sluggish start, largely due to the weakening of the US dollar," said Dilip Parmar, senior research analyst, HDFC Securities. US recession concerns and rising inflation added pressure on the dollar. The rupee traded in a volatile range of 85.75 to 85.35. A 1% drop in the dollar index aided the rupee's recovery. The new tariffs, although higher than expected, are lower compared to China, Vietnam and Thailand.

Asian currencies started weaker but pared losses. The offshore yuan retreated from 7.34 to 7.30. Indian equities outperformed, with Nifty 50 down 0.3% compared to Hang Seng's 1.5% drop. US stocks saw a negative opening, while the dollar index hit a six-month low. Safe havens like the yen and Swiss franc surged as central banks hedged reserves by deploying funds in alternative currencies.

India is assessing the impact of US tariffs and pushing for a trade deal. The dollar index dropped 1.65% to 102.09, while Brent crude fell 4.1% to $71.88 per barrel. Bloomberg's dollar gauge saw its steepest intraday decline since 2005, dropping 2.1%. Investors expect further dollar depreciation, with traders viewing a US slowdown as a bigger risk than inflation.