Rupee slips past 87-mark against US dollar, hits lowest level in over 4 months. What's behind the weakness?
Rupee opened on a weaker note and depreciated by 24 paise from its previous close, touching an early low of 87.15 against the greenback. In the previous session, the rupee had already slipped to an over four-month low, ending 21 paise lower at 86.91.
The dollar index, which gauges the greenback's strength against a basket of six currencies, fell by 0.11% to 98.77.
US President Donald Trump said Indian exports to the US would likely see 20% - 25% tariffs, a move that could squeeze export margins, widen the current account deficit, and keep the rupee under pressure.
'A possible 20–25% tariff on Indian exports, suggested by US political rhetoric, has intensified pressure. Delays in concluding a bilateral trade deal, with a deadline looming August 1, are denting investor confidence. A surging US dollar index, partly due to euro weakness after a US–EU trade deal, is applying headwinds to the INR,' said Jigar Trivedi, Senior Research Analyst at Reliance Securities.
Meanwhile, Reuters reported that India is holding off on fresh trade concessions ahead of the August 1 deadline and instead aims to wrap up a comprehensive bilateral deal by September or October.
'The rupee slipped to a fresh four-month low, caught in a crossfire of delayed trade progress, surging oil prices, and global risk repricing. With no breakthrough on the India-US trade front and crude rising sharply, the rupee had little choice but to retreat,' said Amit Pabari, MD, CR Forex Advisors.
On the domestic front, focus will be on the Reserve Bank of India's (RBI) monetary policy next week.
'While rates are expected to remain unchanged, the stance will be crucial — a more cautious and assertive tone could support the rupee, whereas a lenient or accommodative approach may weigh on it further,' Pabari said.
Jigar Trivedi believes if US-India trade negotiations escalate, or if tariff threats materialize, USD/INR could temporarily breach 87.20 and 87.60 levels in August.
Amit Pabari expects the pressure on rupee is likely to persist in the near term.
'Continued dollar strength and trade uncertainty could push it further toward the 87.20 – 87.35 zone. The 87 mark remains a critical level, as heightened volatility around it may trigger RBI intervention. On the downside, support is seen between 86.20 and 86.50,' Pabari said.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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