WEEKAHEAD - Rupee to sway to tariff flux; bond traders track oil prices, supply worries

A man counts Indian currency notes at a roadside currency exchange stall in the old quarters of Delhi, India, February 2, 2026. REUTERS/Anushree Fadnavis · Reuters

Reuters

Mon, 23 February 2026 at 10:37 am GMT+9 3 min read

MUMBAI, Feb 23 (Reuters) - The Indian rupee will track developments in U.S. tariff policies this week after the U.S. Supreme Court struck down levies imposed by President Donald Trump, prompting him to raise a temporary tariff on U.S. imports ‌from 10% to 15%.

Bond traders, meanwhile, will monitor further movements in oil prices and evolving demand-supply dynamics.

The rupee closed at ‌90.9825 on Friday, down about 0.4% on the week, but managed to hold above the 91-per-dollar level on the back of interventions from the Reserve Bank of India.

The ​focus this week will be squarely on how countries across the globe respond to the U.S. Supreme Court’s decision on tariffs and the Trump administration’s subsequent measures.

India has delayed plans to send a trade delegation to Washington this week, a source in its trade ministry said on Sunday.

“India is also likely to reassess its U.S. trade deal, especially as the threat of punitive tariffs with respect to Russian oil purchases is gone - albeit ‌India may choose to continue tapering purchases to ⁠maintain relations with Trump,” Madhavi Arora, an economist at Emkay Global.

The dollar weakened marginally following the court’s decision. Analysts at Goldman Sachs reckon that policy uncertainty is a particularly important channel for the dollar, as it ⁠can negatively influence investor and business activity.

While the court’s decision to strike down a large swath of Trump’s tariffs has weakened his ability to threaten and impose levies at a moment’s notice, it is unlikely to eliminate gnawing uncertainty for trade partners.

BONDS

The benchmark 10-year yield climbed 4 basis points last ​week to ​settle at 6.7214% on Friday.

The selloff was driven by higher crude oil ​prices after Trump issued fresh warnings urging Iran to ‌strike a deal on its nuclear programme, prompting Tehran to threaten retaliation against U.S. bases.

Traders expect the yield to move in a 6.65%-6.78% range this week, with the bias tilted towards the upside if crude oil prices rise further and in the absence of official support to contain yields.

A large U.S. military build-up in the Middle East has heightened fears of a wider conflict, pushing up the benchmark Brent crude contract to $72.34 per barrel on Friday, its highest level in nearly seven months.

“Currently the risk remains over spike in oil prices and rise ‌in global bond yields,” Prashant Pimple, fixed income CIO at Baroda BNP Mutual ​Fund said.

However, demand for bonds from banks may increase as deposit rates rise, coupled ​with possibility of inclusion in a global index next fiscal ​year, Pimple said.

Story Continues  

Supply may be lower than announced as buybacks and higher inflow of small saving schemes materialise, ‌he added.

New Delhi will switch securities worth 250 billion ​rupees ($2.75 billion) maturing in the next financial ​year with longer-duration securities on Monday.

It had earlier exchanged shorter-duration notes for longer-term securities worth 755 billion rupees with the RBI this month, and investors anticipate further support to cool yields. KEY EVENTS:

India

** January fiscal deficit - February 27, Friday (3:30 p.m. IST) ** October-December ​GDP growth - February 27, Friday (4:00 p.m. IST)(Reuters ‌poll - 7.2%)

U.S. ** December factory orders - February 23, Monday (8:30 p.m. IST)

** February consumer confidence - February 24, Tuesday (8:30 p.m. IST)

** Initial weekly ​jobless claims for week to February 21 - February 26, Thursday (8:30 p.m. IST)

** January PPI machine manufacturing - February 27, Friday (7:00 ​p.m. IST)

(Reporting by Jaspreet Kalra and Dharamraj Dhutia; Editing by Sumana Nandy)

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