Rupee Weakens Past 87 Mark To Record Low On Trump Tariff Impact

Rupee weakened by 41 paise to open at a record low of Rs 87.02 against the greenback, according to Bloomberg. After opening, the local currency fell 55 paise lower to 87.17, against the US dollar before it further dropped by 65 paise to a fresh record low of 87.26 against the dollar. It had closed at Rs 86.61 on Friday.

The local currency weakened by 41 paise to open at Rs 87.02 after the 2025 Budget against the greenback. Monday marks the worst open since February 2023.

Chief Economic Advisor V Anantha Nageswaran told Bloomberg that the premature talk about implications of US tariffs have impacted the currency. Budget tax cuts are meant to boost private sector capex. Government is expected to see US tariff impact via financial markets as global uncertainties remain very high, he added.

The Indian government’s decision to lower the fiscal deficit target to 4.4% of GDP for FY25-26, down from 4.8% in the previous fiscal, signals a strong commitment to fiscal prudence. This disciplined approach is expected to enhance investor confidence in the rupee by curbing borrowing needs, easing pressure on bond yields, and maintaining liquidity control, said Amit Pabari, managing director of CR Forex Advisors.

"Moreover, the budget’s ambitious Rs 10.18 lakh crore capital expenditure plan, coupled with reforms like allowing 100% FDI in the insurance sector, could attract robust foreign inflows, providing further support to the rupee," he said.

While tax relief measures, such as raising the tax exemption limit to Rs 12 lakh and Rs 1.5 lakh crore in interest-free loans for state capital expenditure may introduce some fiscal strain, the overall deficit reduction reinforces optimism for the rupee’s trajectory, Pabari said.

Indian rupee fell to its lowest as Trump Tariffs killed global markets and risk aversion took a toll on all assets, including gold and Crypto. Dollar reigned supreme, being a safe asset, with Swiss Franc and JPY all falling, said Anil Kumar Bhansali, head of treasury and executive director of Finrex Treasury Advisors LLP.

Ajay Seth, economic affairs secretary said that RBI will continue to take care of volatility in Rupee. Dollar appreciation has thrown up some challenges. India will not backload government borrowing programme, that India will continue to switch bonds via market route, Seth said.