MUMBAI, May 30 (Reuters) - The Indian rupee gained on Friday, as uncertainty around U.S. tariffs following a temporary reinstatement pulled the dollar index back below the 100-handle.

The dollar index had risen to a peak of 100.48 on Thursday after a trade court blocked most of U.S. President Donald Trump's tariffs, but quickly reversed course to fall 0.6% after an appeals court temporarily reinstated the levies as it considered the government's appeal.

Sign up here.

The rupee , aided by broad weakness in the dollar, rose 0.2% to 85.35 as of 10:40 a.m. IST, nearly the same level it was at before the initial block on the tariffs.

The weakness in the dollar also reflected weaker-than-expected labour market data and U.S. consumption data, MUFG Bank said in a note.

In the near-term, focus is likely to stay on developments on U.S. trade policies, especially as the end of the 90-day pause on country-specific reciprocal tariffs, starting April 9, draws near.

"Our expectation for a trade deal to be struck between India and U.S. beyond the day-to-day uncertainty is a factor underpinning our view for USD/INR to grind lower to 83.50 by 1Q2026, coupled with lower inflation and more supportive domestic policies including rate cuts by RBI," MUFG said.

Traders also pointed to dollar selling interest from at least two foreign banks, likely on behalf of custodial clients, which helped lift the rupee.

Other Asian currencies were trading flat-to-slightly lower, while India's benchmark equity index, the Nifty 50 (.NSEI) , opens new tab, fell about 0.3%, tracking a fall in most regional equities.

https://www.reuters.com/world/india/rupee-gains-dollar-index-reverses-course-us-tariff-twist-2025-05-30/