Mumbai, Feb 3 (PTI) – The Indian rupee plunged 49 paise to close at an all-time low of 87.11 against the US dollar on Monday, weighed down by escalating trade tensions after the Trump administration imposed fresh tariffs on Canada, Mexico, and China. The imposition of these duties strengthened the American currency in global markets, intensifying pressure on emerging market currencies.
According to forex traders, the rupee hit an intra-day low of 87.29 against the dollar as the US dollar index surged above the 109 mark, coupled with a weak global market sentiment. The Trump administration announced a 25% tariff on Canada and Mexico, while China faced a 10% duty, fueling fears of a prolonged trade war.
At the interbank foreign exchange market, the rupee opened on a weak note at 87.00 and continued to slide throughout the session before settling at its record low of 87.11, down by 49 paise from its previous close of 86.62 on Friday.
Market Experts Weigh In
Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said, "We expect the rupee to trade with a negative bias due to a strong US dollar and FII outflows amid weak domestic market trends. Concerns over US tariffs may further pressure the rupee."However, he added that any intervention by the Reserve Bank of India (RBI) could provide support to the local currency. Additionally, traders will be closely watching the ISM manufacturing PMI data from the US, along with the RBI’s upcoming monetary policy meeting.
Meanwhile, the dollar index, which measures the greenback against a basket of six major currencies, surged 1.01% to 109.46.
Global Market Impact
Brent crude, the international oil benchmark, climbed 1.41% to $76.74 per barrel in futures trade. The rupee’s continued depreciation was also attributed to sustained foreign fund outflows, heightened dollar demand from oil importers, and weak risk appetite among investors.On the domestic front, the stock market mirrored the bearish sentiment. The BSE Sensex fell 319.22 points, or 0.41%, to close at 77,186.74, while the Nifty declined 121.10 points, or 0.52%, ending at 23,361.05. Foreign institutional investors (FIIs) offloaded equities worth ₹3,958.37 crore in Monday’s session, further contributing to market weakness.
Forex Reserves and RBI’s Stance
Despite the rupee’s slide, India's forex reserves saw an increase of $5.574 billion, reaching $629.557 billion in the week ending January 24, according to RBI data. This follows a previous decline of $1.888 billion, which was attributed to revaluation and RBI’s interventions to curb rupee volatility.Finance Secretary Tuhin Kanta Pandey reassured that there is no immediate concern over the rupee’s value, stating, "The volatility in the rupee is being managed by the RBI. The currency is on a free float system, with no fixed rate control."
With global trade uncertainties and FII outflows weighing on the rupee, investors remain cautious ahead of the RBI’s upcoming policy decisions, which could play a crucial role in stabilizing the currency in the near term.