Weaker dollar unlikely to help rupee amid tariff worries, importer hedging

MUMBAI, March 10 (Reuters) – The Indian rupee is likely to open lower on Monday despite weakness in the U.S. dollar as concerns over global trade tensions continue to dampen risk appetite, while importers’ hedging requirements may also weigh on the currency.

The one-month non-deliverable forward indicated that the rupee will open at around 87.15 to the U.S. dollar compared with its previous close of 86.8725. The dollar index was at 103.7, hovering slightly above a four-month low hit on Friday after data showed that the U.S. economy created slightly less jobs than expected in February while the unemployment rate ticked up. Other Asian currencies were mostly weaker, tracking losses in the offshore Chinese yuan which declined 0.2% amid concerns about building deflationary pressures in China.

U.S. President Donald Trump’s tariff policies are also likely to stay in focus amid concerns about the growth impact of a global trade war, especially with the U.S. economy displaying signs of a slowdown.

Risk aversion has driven investors to safe-haven currencies like the Japanese yen and the Swiss franc, which are both trading at multi-month highs. India’s high tariffs require a rethinking of its “special relationship” with the United States and should be brought down, U.S. Commerce Secretary Howard Lutnick told India Today television on Friday. India could be acutely susceptible to Trump’s reciprocal tariffs, expected to come into force in April, due to the country’s high import levies, analysts have said.

In addition to tariff-related risk aversion, importers’ appetite to “lap up dips on the dollar-rupee pair” are likely to keep the local currency’s gains limited in the near-term, an FX salesperson at a foreign bank said.

Consumer inflation data from the United States and India, due on Wednesday, will be in focus as they will influence expectations of rate cuts by the countries’ central banks.

** One-month non-deliverable rupee forward at 87.34; onshore one-month forward premium at 18.75 paisa

** Dollar index at 103.73

** Brent crude futures down 0.6% at $70 per barrel

** Ten-year U.S. note yield at 4.28%

** As per NSDL data, foreign investors sold a net $303 million worth of Indian shares on March 6

** NSDL data shows foreign investors sold a net $8.3 million worth of Indian bonds on March 6 (Reporting by Jaspreet Kalra; Editing by Varun H K)