Rupee Plunges To Record Low Of 87.29 Against US Dollar Amid Trump’s Tariff Hike Fears

The Indian rupee slumped by 67 paise to an all-time low of ₹87.29 against the US dollar in early trading on Monday as fears of a global trade war escalated following fresh tariffs imposed by US President Donald Trump on Canada, Mexico, and China.

At the interbank foreign exchange market, the rupee opened at ₹87.00 per dollar before slipping further to ₹87.29.

This follows a relatively stable close at ₹86.62 against the US dollar on Friday.

Tariffs and Trade War Concerns

Over the weekend, Trump announced hefty import duties, slapping 25% tariffs on Canada and Mexico and 10% on China.

The move has stoked fears of a wider global trade conflict, with forex traders warning that this could be just the beginning of a potentially damaging economic showdown.

Adding to the pressure on the rupee were continued foreign fund outflows, amounting to ₹1,327.09 crore on Saturday alone, along with a strengthening US dollar in global markets.

Traders noted that increased dollar demand from oil importers and waning risk appetite had also contributed to the rupee's weakness.

Impact on Global Markets

Brent crude oil futures climbed 0.71% to $76.21 per barrel. The US dollar index, which measures the greenback's strength against a basket of six major currencies, surged 1.30% to 109.77.

India's Forex Reserves See Temporary Rise

Meanwhile, India's foreign exchange reserves saw a temporary uptick, rising by $5.574 billion to $629.557 billion in the week ending 24th January 2025, according to the Reserve Bank of India (RBI).

However, the broader trend remains concerning, as forex reserves had fallen by $1.888 billion to $623.983 billion overall, continuing a decline that has persisted in recent weeks.

Analysts attribute the fall in reserves to RBI's interventions in the forex market, aimed at stabilising the rupee and reducing currency volatility.

With the ongoing trade tensions and a strong US dollar, market watchers will be keeping a close eye on how the RBI manages the rupee's downward trajectory in the coming days.