Rupee Breaches 87 Level And Hits Record-Low Against US Dollar. Here’s Why

The Indian rupee reached a new record low on Monday following concerns triggered by the US President Donald Trump’s latest tariffs. The domestic currency breached the 87 level against the US dollar as it depreciated 55 paise to settle at a fresh all-time low of 87.17 (provisional) against the greenback.

Globally, sentiment in the market was impacted heavily after Trump levied fresh tariffs on Canada, China, and Mexico. Forex traders observed, “The Indian rupee touched a fresh all-time low on a surge in the US Dollar index and weak global markets after Trump Tariffs on Canada Mexico, and China triggered fears of a broad trade war,” reported PTI.

Notably, the US President imposed 25 per cent tariffs on Canada and Mexico, and levied 10 per cent duty on Chinese goods, effective February 4. The Indian rupee opened on a muted note at 87 at the interbank foreign exchange and hit an intra-day low of 87.29 against its American counterpart. 

Eventually, the rupee closed the day at a record-low of 87.17 (provisional), clocking a fall of 55 paise against its close in the previous trading session.

Anuj Choudhary, Research Analyst, Mirae Asset Sharekhan, explained, “We expect the rupee to trade with negative bias on strong US Dollar and FII outflows amid a weak trend in the domestic markets. Worries over tariffs by the US administration may also pressurise the rupee. However, any central bank intervention may support the rupee. Traders may take cues from ISM manufacturing PMI data from the US. Investors may remain cautious ahead of the RBI’s monetary policy meeting this week.”

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The dollar index traded 1.01 per cent higher at 109.46. The index helps understand the dollar’s strength against a basket of six currencies. The global oil benchmark, Brent crude, climbed over 1 per cent to hit $76.74 per barrel in futures trade.

The Indian equities also closed the Monday trading session in red, following the sentiment spread across global markets. 

Notably, the Reserve Bank of India is scheduled to host its bi-monthly monetary policy committee (MPC) meeting this week to deliberate on key interest rates and fiscal policy going ahead.