Trump Tariffs Impact: Rupee Hits Five-Month Low

The Indian rupee opened weaker on Thursday at 87.69 against the U.S. dollar, slipping from Wednesday’s close of 87.42 and marking its lowest level in five months.

The decline follows heightened geopolitical and trade tensions triggered by U.S. President Donald Trump’s announcement of a 25% tariff on Indian exports and potential penalties for importing Russian oil and arms.

Currency traders are bracing for volatility, with the rupee expected to trade in the 87.25–88.00 range through the day. “Exporters should consider hedging their positions, while importers may wait to hedge and buy at intraday lows,” said Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors LLP.

The pressure on the rupee is compounded by rising crude prices. Brent crude climbed for the fourth consecutive session, settling at $72.31 per barrel on Wednesday, amid concerns over supply disruptions linked to secondary sanctions on Russian oil buyers.

Bhansali noted that the rupee has already depreciated over 3% since April, when it touched a high of 83.75. “With oil companies aggressively purchasing dollars ahead of the expected enforcement of U.S. penalties, and the RBI intervening only intermittently, the rupee has struggled to hold ground,” he said.

Despite a slight dip in the U.S. dollar index to 99.77, the greenback remains near a two-month high, buoyed by strong U.S. economic data and the Federal Reserve’s hawkish stance.

Market participants expect the Reserve Bank of India to step in if the rupee approaches the critical 88-per-dollar threshold.