Mumbai, Aug 26: The Indian rupee depreciated by 13 paise to close at 87.69 against the US dollar on Tuesday, pressured by weak domestic equity markets and concerns over impending US tariffs on Indian goods.
This fall comes after the US issued a draft notice confirming plans to impose an additional 25% tariff on Indian products starting August 27, as announced earlier by President Donald Trump.
At the interbank foreign exchange market, the rupee opened at 87.74, touched a high of 87.63, and a low of 87.80 during the day before settling at 87.69. On Monday, the rupee had closed at 87.56.
Analysts said the rupee’s decline was driven by fears over the impact of the steep 50% total tariff (including the new 25% hike) on Indian exports to the US.
Sectors likely to be hit include shrimp, leather, apparel, and gems & jewellery—many of which are labour-intensive. These tariffs could affect over half of India’s $86 billion exports to the US, though key sectors like pharmaceuticals, electronics, and petroleum products remain exempt.
Anuj Chaudhary, Research Analyst at Mirae Asset ShareKhan, noted that domestic equities also weakened, and the fear of more tariffs targeting Russia and its partners added to global uncertainty.
However, the rupee’s losses were cushioned slightly by the fall in global crude oil prices, with Brent crude down 1.48% at $67.78 per barrel.
Additional factors influencing the currency markets included political instability in the US, where President Trump fired Federal Reserve Governor Lisa Cook.
This caused a slight drop in the US dollar index, which slipped 0.05% to 98.37.
On the domestic market front, the Sensex plunged 849.37 points to close at 80,786.54, while the Nifty dropped 255.70 points to 24,712.05.
Foreign Institutional Investors (FIIs) were net sellers, offloading shares worth Rs 6,516.49 crore.
Analysts expect the rupee to trade with a negative bias in the near term due to tariff uncertainties, weak domestic equities, and continued FII outflows.
However, support may come from softer crude prices and a weaker dollar. The USD/INR pair is expected to remain within the 87.50–88 range. Dilip Parmar of HDFC Securities warned that a new low for the rupee could be imminent, despite temporary support from MSCI rebalance inflows. (PTI)
