MUMBAI, April 7 (Reuters) - The Indian rupee is set to slump at open on Monday, pegged back by the selloff in Asian equities on mounting fears that U.S. tariffs would hurl the world economy into a slowdown.
The 1-month non-deliverable forward indicated that the rupee will open at 85.75-85.80 to the U.S. dollar compared with 85.2350 in the previous session.
The rupee "so far had managed to avoid all the mayhem prompted by the tariffs - not any more", a currency trader at a Mumbai-based bank said.
The extent of risk aversion will make sure the up-move on dollar/rupee at open will sustain and will likely build, he said.
Futures on the S&P 500 Index were down 2.5%, indicating a continuation of the two-day 10% selloff prompted by U.S. President's reciprocal tariffs.
Shares in Hong Kong plummeted 9%, while equities in Australia, South Korea, Japan, and China fell between 4% and 7%.
Safe-haven flows pushed U.S. Treasury yields lower and prompted a rally in the Japanese yen.
Investors are exiting risk assets and flocking to safe havens amid mounting concerns that the U.S. tariffs announced last week will stoke inflation and usher in a period of subdued global growth.
White House officials showed no sign of backing away from last week's broad tariff plans, leading to investors dumping risk assets and running to safe havens.
Trump told reporters on Sunday that investors would have to take their medicine and that he would not do a deal with China until the U.S. trade deficit was sorted out.
"The biggest threat to the global goods trading system since World War II is forcing a rapid de-leveraging in risk assets and escalation in recession risks," ANZ Bank said in a note.
It is difficult to see where this "self-reinforcing downward spiral" will halt unless space is created for negotiation in the coming days, it said.
KEY INDICATORS:
** One-month non-deliverable rupee forward at 86.; onshore one-month forward premium at 20.75 paise
** Dollar index up at 103.15 ** Brent crude futures down 2.9% at $63.7 per barrel ** Ten-year U.S. note yield falls to 3.93% ** As per NSDL data, foreign investors sold a net $345.4mln worth of Indian shares on Apr. 3
** NSDL data shows foreign investors sold a net $136.9mln worth of Indian bonds on Apr. 3
Reporting by Nimesh Vora; Editing by Janane Venkatraman
Source: Reuters