Rupee Falls 61 Paise On Trump’s tariff Threats

Mumbai: The Indian rupee fell 61 paise on Wednesday to 87.42, its sharpest single-day fall in nearly four months as markets reacted to heightened geopolitical and trade concerns. The trigger was US President Donald Trump’s announcement of a 25 per cent tariff on Indian exports, along with an additional penalty India will be required to pay starting August 1, in response to its continued oil imports from Russia and defense purchases. The development spooked investors and prompted heavy foreign fund outflows from Indian equities, amplifying pressure on the domestic currency. Additionally, rising Brent crude oil prices too added to the pressure on the rupee.

At the interbank foreign exchange, the domestic unit opened at 87.09 against the greenback and continued to weaken throughout the session falling to 87.52 on constant pressure from oil companies buying Russian oil to fulfill the demand as after 10 days Trump may implement 100 per cent tariff on secondary buyers of Russian oil. The buying continued for all day long until the rupee closed at 87.42 rising from a low of 87.52 which was very near to its all time low closing of 87.57. The rupee has previously closed at 86.81 to a dollar.

“The lowest rupee has reached is 87.95 which is also quite close. Tomorrow the FED will announce its interest rate decision and the market will trade in accordance with it. FPIs are also sellers in the market keeping up the pressure on the rupee. In-flows were getting absorbed from the outflows and did not have any impact on the direction of the rupee. We expect the rupee to trade in the range of 87-88 tomorrow awaiting the US data and FED rate decision. The premiums fell as RBI intervened to receive them,” said Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors.

“India has charged basically more tariffs than almost any other country….over the years…you just can’t do that,” Trump said.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, was slightly down from its previous sessions but was on a move to an upside at 98.83 having strengthened 2.08 per cent in the past month.

The US team will visit India on August 25 for the next round of negotiations for the proposed bilateral trade agreement between the two countries. However, the prospects for an interim deal may look dim, as US Trade Representative Jamieson Greer has said more negotiations will be needed with India on a trade pact.