Rupee Plunges to Historic Low Amidst Trade War Fears
- Posted on February 3, 2025
- News
- By Arijit Dutta
- 12 Views
The Indian rupee fell to a historic low of 87.29 against the US dollar after President Donald Trump imposed fresh tariffs on Canada, Mexico, and China. Trade war fears, foreign fund outflows, and a strong dollar contributed to the decline. The RBI is expected to intervene as markets remain volatile.
The Indian rupee hit a record low of 87.29 against the US dollar on Monday, February 3, 2025, following fresh trade tariffs imposed by US President Donald Trump. The sharp decline of 67 paise in early trade raised concerns among investors as global markets reacted to escalating trade tensions.
Trump’s latest move saw Canada and Mexico facing a 25% tariff, while China was subjected to a 10% duty. This decision triggered fears of a global trade war, leading to volatility in financial markets. The US dollar gained strength, with the dollar index climbing 0.22% to a two-year high of 109.72, while 10-year US bond yields remained elevated at 4.76%.
At the interbank foreign exchange, the rupee opened at 87.00 before slipping further. On Friday, it had closed at 86.62 against the dollar. Analysts noted that apart from trade war concerns, foreign fund outflows also contributed to the rupee’s depreciation. Foreign investors pulled out ₹1,327.09 crore on Saturday alone, further pressuring the currency.
Meanwhile, global oil prices edged higher, with Brent crude rising 0.71% to $76.21 per barrel in futures trade. The Reserve Bank of India (RBI) is expected to intervene to stabilize the rupee, with experts predicting a trading range between 86.65 and 87.00 for the day.
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India’s forex reserves increased by $5.574 billion to $629.557 billion in the week ending January 24. However, the reserves have been on a downward trend due to revaluation losses and interventions aimed at curbing volatility in the rupee.
As markets brace for further fluctuations, investors remain cautious about the potential economic impact of Trump’s aggressive trade policies.
