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Rupee skids close to record low as Trump threatens more tariffs
The domestic currency opened 16 paise lower at 87.82 against the dollar on Tuesday, according to Bloomberg. The rupee has declined 2.6 per cent so far in the calendar year and recorded its worst monthly fall in July since September 2023. The rupee's record low stands at 87.95, touched in February this year.
Trump, in the social media platform Truth Social, threatened to 'substantially' raise tariffs on Indian goods, accusing the country of profiting from the resale of Russian oil and ignoring the human toll in Ukraine.
India, however, dismissed Trump's remarks, calling them 'unjustified and unreasonable.' The Ministry of External Affairs (MEA) stressed that India's energy ties with Russia are driven by national "necessity" and are far smaller in scale compared to trade between Russia and the West.
The domestic currency remained under pressure and is likely to stay weak this week after Trump signalled the possibility of higher tariffs on India for continuing to purchase Russian oil, according to Anil Kumar Bhansali, head of treasury and executive Director at Finrex Treasury Advisors LLP. "The currency has also faced sustained pressure from foreign portfolio investors (FPIs) following Trump's earlier announcement of 25 per cent tariffs on all Indian exports, despite ongoing trade talks."
FPIs remained net sellers for teh 11th straight session on Monday, selling equities worth ₹2,403 crore in the previous session. In this calendar year so far, global funds have sold stocks worth ₹1.03 trillion, as per NSDL data.
The rupee closed at 87.6550 on Monday and is expected to open at a fresh low of 88 on Tuesday, following Trump's latest remarks specifically targeting India, Bhansali said. Exporters may continue to sell at current lows, while importers are likely to adopt a wait-and-watch approach, he said. "Market participants will closely monitor the Reserve Bank of India's stance on the rupee's new levels in today's session."
Meanwhile, the focus will be on RBI Governor Sanjay Malhotra as the Monetary Policy Committee (MPC) begins its meeting yesterday, August 4, to decide on key interest rates. The RBI is likely to remain status quo as per a Business Standard poll, with all analysts expecting a further reduction in the 2025-26 (FY26) inflation forecast.
The dollar index, the measure of the greenback against a basket of six major currencies, was up 0.07 per cent at 98.84.
In commodities, crude oil prices extended their three-day fall amid looming trade tensions between India and the US. Brent crude price was down 0.29 per cent at 68.56 per barrel, while WTI crude prices were lower by 0.33 per cent at 66.07, as of 9:15 AM IST.
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