New Delhi, 3 February 2025: The rupee tumbled 67 paise to an all-time low of 87.29 against the US dollar in early trade on Monday as fresh tariffs imposed by US President Donald Trump on Canada, Mexico, and China intensified concerns over a global trade war.
Market participants pointed to sustained foreign fund outflows and strong dollar demand from oil importers as additional pressure points weighing on the domestic currency.
At the interbank foreign exchange market, the rupee opened at 87.00 before slipping further to 87.29, marking a sharp decline from its previous close of 86.62.
The depreciation came amid broad strength in the US dollar, which surged against major global currencies as investors rushed toward safe-haven assets.
“The start of the week saw financial markets on edge as US President Donald Trump followed through on his tariff threats, imposing duties on imports from Mexico, Canada, and China,” said Amit Pabari, Managing Director at CR Forex Advisors.
He added that risk aversion had accelerated, driving the dollar higher toward 109.50 levels.
Trump’s tariff measures included 25% duties on Canada and Mexico and a 10% levy on China, a move that forex analysts described as the first step toward a potentially damaging global trade war. The dollar index, which tracks the greenback’s strength against a basket of six major currencies, climbed 1.30% to 109.77.
The US dollar’s strength pushed global currencies to multi-year lows, with the euro falling to 1.0224, the British pound slipping to 1.2261, and the Japanese yen declining to 155.54. Asian currencies also suffered losses, with the Chinese yuan sliding to 7.3551, the Indonesian rupiah dropping to 16,448, and the South Korean won weakening to 1,470.
“Amongst Asian currencies, the yuan slumped, while the rupee continues to face headwinds due to dollar demand and weak risk appetite,” said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.
Brent crude, the global benchmark for oil prices, rose 0.71% to $76.21 per barrel in futures trade, adding to concerns over import costs for India.
Equity markets also reacted negatively, with the 30-share BSE Sensex falling 575.89 points, or 0.74%, to 76,930.07, while the Nifty dropped 206.40 points, or 0.88%, to 23,275.75.
Foreign institutional investors (FIIs) pulled out ₹1,327.09 crore from the capital markets on Saturday, further pressuring the rupee.
Despite the currency’s slide, India’s foreign exchange reserves increased by $5.574 billion to $629.557 billion for the week ending January 24, according to data released by the Reserve Bank of India (RBI) on Friday.
However, the overall reserves had declined in previous weeks due to market interventions by the central bank to curb rupee volatility.
“The rupee’s range for the day is expected to be between 86.65 and 87.00, with the Reserve Bank likely to step in to cool off excessive dollar bids,” Bhansali noted.
