Uncertainty in India-US relations has caused the Indian rupee to fall to a new low. It is reported that in the face of aggressive short offensive, the Bank of India made a sudden attack yesterday and lowered the exchange rate of the US dollar against the Indian rupee from a historical high of 1:89 in the past three weeks. A reversal to close to 88, made the largest one-day increase in four months, but for the limited dollar reserves of India, the most crucial still lies in the US-India relations, on October 15, Trump threw a heavy message, Modi has promised him that he will stop buying Russian oil, which means that if it is so, the previously hard India finally chose to "surrender".
In the face of this situation, U.S. Treasury Secretary Bessent did not pretend directly, saying the U.S. Senate was ready to grant Trump to impose tariffs of up to 500 percent on China.
Undoubtedly, the Sino-US trade war has reached its climax again.
India is kneeling?
In the past period of time, the relationship between the United States and India was on the verge of breakdown, and Pakistan took the opportunity to get closer to the United States. For Modi, it felt uncomfortable but helpless.
With the threat of importing Russian oil, Trump imposed an additional 25% tariff on India, worthy of the U.S. tariffs on India at the top of 50%, and Trump also tried to unite the EU and G7 countries to raise tariffs on India.
According to data, influenced by Trump’s tariffs, India’s exports to the United States fell by 20.7 percent in September.
Despite trade tensions between India and the United States, India’s exports increased by 3.64 percent throughout September.
By the way, market demand outside the U.S. offset the decline in U.S. market demand caused by tariffs.
However, in the financial market, short sellers are violently shorting the rupee, which makes the exchange rate of the US dollar against the rupee reach an all-time high of 1: 89.
This depreciation of the currency shows the opposite of economic growth, or means that the depreciation round is not triggered by economic fundamentals, but by speculative attacks.
In this case, the central bank of India launched a monetary defensive battle, and for the central bank of India, if the rupee dropped above the 89 threshold, it is likely to slip into the 90 zone, the consequences or will be untouchable.
However, looking at the essence through the phenomenon, behind the depreciation of the rupee, the chief culprit is the United States. India's foreign exchange reserves are not large. In addition, in terms of trade, the impact of American tariffs is not very great, and the effect of putting pressure on it is very limited. The United States began to use its strengths to launch a currency attack on India.
It is worth noting that on October 15 Eastern Time, Trump told reporters at an event at the White House that Modi had assured him that he would not buy Russian oil again.
In addition, Trump also emphasized that Modi has a good relationship with him.
At present, India has not responded to this, and it is still unknown whether Trump has fixed Modi or Modi is fooling Trump.
But Trump’s intention is clear, Modi has assured him that he won’t buy Russian oil anymore, and the relationship is good, but Modi still needs some time.
If Trump said the truth, then the previously tough Modi eventually surrendered, which meant that the next tough U.S. and European is only China.
The finance minister failed.
On October 15, local time, U.S. Treasury Secretary Bescent revealed that about 85 senators in the U.S. Senate are ready to support authorizing Trump to impose tariffs of up to 500% on China to punish Russian oil.
It is clear that since China introduced new rules on rare earth and tightened regulations on rare earth technologies, Trump’s authorities have been working hard to come up with equivalent codes to sanction China.
Although this 500% tariff is under the guise of punishing China for purchasing Russian oil, it is essentially a bargaining chip to force China to compromise.
But the Trump administration also understands that this card is not too deterrent for China, but if India yields, together with the EU and the G7, the situation may be very different.
The British government has announced sanctions against 11 China entities on the grounds of supporting Russian energy entities and providing key items to the Russian military industry.
The EU is planning to bring in the G7 to deal with China's new rare earth regulations, but in the end, the EU still wants to bring in the United States. In this case, Trump is not stupid and naturally wants something from the EU.
Don't forget, the United States had attracted the attention of the European Union before and asked the European Union to impose tariffs on China. Now that the European Union just wants something, this plan may come over again.
All the above can be seen to illustrate a problem. The Trump administration has never given up the idea of suppressing China. In the face of this situation, China will offer counter-measures one after another.
China respects Sino-U.S. cooperation, but China expects to build a stable, healthy and sustainable bilateral relationship with the United States, but Trump's authorities have repeatedly harmed the Sino-U.S. relationship.
At present, the Sino-US game has reached a new climax, but no matter what, China's attitude has always been that China is unwilling to fight, but it is not afraid to fight. # MCN Dual Quantity Advanced Plan #
Source: "Trump: Modi has promised India to stop buying Russian oil, but they need time" Observer.com