Rupee Hits Record Low Amid US Tariff Threats, Oil Concerns
Trump's new tariffs on India and penalties over Russian oil imports pressured the rupee, which fell to 87.95 against the dollar. His threats and criticism add to the strain.
US President Donald Trump's move to impose new tariffs on India and announce additional penalties over its oil imports from Russia has weighed on the rupee, which fell by 29 paise to 87.95 against the US dollar in early trade on Tuesday, according to a PTI report.
Forex traders, as quoted by PTI, said the Indian rupee was under pressure and may continue to remain under pressure during this week after Trump said he may announce higher tariffs for India for continuing to buy Russian oil.
In a fresh trade threat against India, President Donald Trump on Monday said he will 'substantially" raise US tariffs on New Delhi, accusing it of buying massive amounts of Russian oil and selling it for big profits.
On Monday, the rupee depreciated 48 paise to close at 87.66 against the US dollar. The rupee has touched a record intra-day low of 87.95 on February 10, 2025.
'The Indian rupee was seen under pressure and may likely continue to remain under pressure during this week after Trump said he may announce higher tariffs for India for continuing to buy Russian oil. There has also been persistent pressure from FPIs after Trump announced 25% tariffs on all Indian exports despite the trade talks continuing," Anil Kumar Bhansali, head of treasury and executive director of Finrex Treasury Advisors LLP.
Last week, Trump launched a strong attack on India and Russia over their growing partnership, saying the two nations could 'take their dead economies down together." In response, New Delhi highlighted that India remains the world's fastest-growing major economy.
Trump had earlier imposed a 25% tariff on Indian imports, along with an unspecified 'penalty" targeting India's purchase of Russian military hardware and crude oil.
Meanwhile, Brent crude futures slipped 0.28% to USD 68.57 per barrel after OPEC+ decided on another hefty output hike for September, fueling worries about oversupply following weak US fuel demand data.
The dollar index, which measures the greenback against six major currencies, edged up 0.04% to 98.81.
On August 1, Trump signed an Executive Order titled 'Further Modifying The Reciprocal Tariff Rates', raising tariffs for over five dozen countries, including a steep 25 per cent for India.
Meanwhile, investors remain cautious ahead of the RBI monetary policy decision this week. Sanjay Malhotra-led Monetary Policy Committee (MPC) has been started from August 04 and the decision will be announced tomorrow, August 06. A 25 per cent cut in the repo rate is expected in the MPC meeting given the range-bound inflation.
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