The Indian currency depreciated to hit a new record low of 87.29 against the dollar in Monday morning trade on the onset of tariffs on China, Canada, and Mexico imposed by US President Donald Trump.
Mounting pressure from foreign fund outflows and the strengthening dollar in the overseas markets, along with demand for the American currency from oil importers, added to the woes of the rupee.
Last week, the rupee settled at 86.62. However, this week, the Indian currency opened at 87.00, and continued slipping.
As forex traders look on, fear of an impending trade war triggered by Donald Trump at the heels of the POTUS slapping Canada and Mexico with 25 per cent duties and China with a 10 per cent duty has gripped the market.
"The start of the week saw financial markets on edge as US President Donald Trump followed through on his tariff threats, imposing duties on imports from Mexico, Canada, and China," said Amit Pabari of CR Forex Advisors.
Such fear has led to risk aversion, thereby surging demand for the American currency, stated Pabari.
Indian markets also opened lower on Monday, with early morning trade shaving off over 575 points from the Sensex and at least 206 points from the Nifty.
On Saturday's special trading on account of the Union Budget 2025, foreign investors (FIIs) offloaded Rs 1,327.09 crore net worth of equities, according to exchanges.
The Reserve Bank of India (RBI) on Friday also reported that the country's forex reserves rose by USD 5.574 billion to reach USD 629.557 billion in the week ended January 24, 2025—a turnaround from the week before, which saw a dip of USD 1.888 billion.
