The rupee on Friday breached the 88-mark for the first-time ever and closed at a record low of 88.19 against the US dollar, tumbling 61 paise amid heightened tensions over India-US trade relations.
Forex traders attributed the sharp fall to the imposition of steep US tariffs on Indian exports, sustained foreign fund outflows, and month-end dollar demand. Weakness in domestic equities further soured sentiment.
The US has imposed a 50% tariff on Indian goods entering its market from Aug. 27, a move expected to weigh heavily on labour-intensive sectors like textiles, leather, footwear, and shrimp.
"Additional US trade tariffs raise concerns over India's trade deficit. Weak domestic markets and FII selling may pressurise the rupee further," said Anuj Chaudhary, research analyst in currency and commodities at Mirae Asset ShareKhan.
Commerce and Industry Minister Piyush Goyal said the government will soon announce measures to boost exports and assured exporters of full support in navigating global trade uncertainties.
Rupee To Slip Further?
Analysts said the RBI could step in to curb volatility if the currency nears 88.50. "The weakness is being driven by the India–US trade war. Hedging demand from importers, steady FPI and corporate outflows, and stop-loss triggers above 87.60 and 88.00 added pressure," said Anindya Banerjee, head of currency and commodity research at Kotak Securities.
He added that the rupee remains undervalued compared to EM peers but near-term direction will hinge on the rollback of US tariffs. Technically, the currency has given a bullish breakout above 87.50, opening the door for a move towards 89.00–89.50 in the short term, he added.
Meanwhile, the dollar index rose 0.14% to 97.94, supported by expectations of a US rate cut in September.
(With inputs from PTI)
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