Rupee Closes At Record Low Against Dollar On Trump-Tariff Impact

The Indian rupee depreciated 58 paise to close at 87.195 against the US dollar on Monday as compared to 86.61 in the previous session.

After opening, the local currency fell 55 paise to 87.17 against the greenback before it further dropped by 65 paise during the day to a fresh record low of 87.26 against the dollar, according to Bloomberg data.

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

Chief Economic Adviser 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 the 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, according to Amit Pabari, managing director of CR Forex Advisors.

"Moreover, the budget' 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 Bhansali, executive director of Finrex Treasury Advisors LLP.

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