Uncertainty on the form and extent of tariffs that Trump will impose has meant choppy price action on the dollar index. The Indian rupee, after a small relief rally, is poised to decline on Thursday, tracking declines in Asian peers on lingering worries over U.S. President Donald Trump's trade policies.
The 1-month non-deliverable forward indicated that the rupee will open at near 86.50 to the U.S. dollar, compared with 86.3225 in the previous session.
The rupee managed a rally in the afternoon session on Wednesday, likely helped by unwinding of long dollar positions. The local currency had managed a similar uptick last week, which did not sustain.
The Reserve Bank of India has been selling dollars to support the rupee frequently, though the extent of intervention has been less than those in previous episodes, according to traders.
There is "good two-way" interest at the current level, a currency trader at a bank said.
"On one hand, it can be said that a lot of (rupee) negatives are already in the price. On the other side, one can say that the Trump factor remains a major risk and U.S. yields are holding up."
Trump, without providing details, has said this week that he will impose 25% tariffs on Canada and Mexico, and 10% punitive taxes on China from Feb. 1, and had talked of levies on European imports.
Uncertainty on the form and extent of tariffs that Trump will impose has meant choppy price action on the dollar index. The 10-year U.S. yield, meanwhile, is roughly at the middle of its recent range.
While it has been a "hugely impactful" beginning to Trump's Presidency, it is lacking on material impulse for markets, partly because it's not clear "what to take seriously or what not", ING Bank said in a note.
Meanwhile, the U.S. Federal Reserve's rate decision is due next week.
