Currency watch: Rupee ends flat at 87.58 as dollar weakens, FIIs turned net buyers amid looming US tariff deadline

The rupee pared early losses and ended flat at 87.58 against the US dollar on Friday, supported by a weaker greenback and a return of foreign fund inflows, even as escalating trade tensions with the US kept market sentiment under pressure.Forex traders said the Indian currency moved in a narrow range during the session, amid weakness in domestic equities and caution around President Donald Trump’s fresh tariff actions, which are set to take effect later this month.At the interbank foreign exchange, the rupee opened at 87.56 and moved between 87.52 and 87.75, before closing unchanged from its previous level. On Thursday, the currency had gained 14 paise, PTI reported.“Uncertainty revolving around the trade war pressurised the rupee. However, softness in crude oil prices prevented a sharp fall,” said Anuj Choudhary, Research Analyst, Commodities and Currencies at Mirae Asset Sharekhan.The dollar index eased 0.16% to 98.24, reflecting broader weakness in the US currency amid rising expectations of a Federal Reserve rate cut and signs of a softening labour market.On August 6, the US announced an additional 25% tariff on all Indian imports—on top of an existing 25% duty—raising total duties to 50%, among the highest ever imposed on any country by the US. The new levy will take effect on August 27.Trump has also ruled out renewed trade talks with India unless the tariff issue is resolved. “No, not until we get it resolved,” he said in the Oval Office on Thursday, when asked about the possibility of reopening negotiations.The US president’s recent executive order links the additional tariff burden to India’s continued purchase of Russian oil, a move that has drawn criticism from trade analysts and import-dependent industries.On the domestic front, foreign institutional investors (FIIs) turned net buyers after several days, purchasing Rs 1,932.81 crore worth of equities on Friday, as per exchange data. However, broader markets remained under pressure.The Sensex fell 765.47 points to settle at 79,857.79, while the Nifty declined 232.85 points to 24,363.30.Brent crude futures were up 0.60% to $66.83 per barrel, helping cushion rupee downside.Meanwhile, India’s forex reserves fell by $9.322 billion to $688.871 billion for the week ended August 1 — one of the steepest weekly drops in recent months, RBI data showed. In the previous week, reserves had risen by $2.703 billion.