The Indian rupee plunged to an all-time low on Monday, breaching the 87 per US dollar mark for the first time. The currency depreciated by 0.5%, touching 87.07 against the greenback during early trade, compared to its previous close of 86.61.
The rupee’s fall mirrored a broader decline in Asian currencies, which came under pressure following a surge in the US dollar. The dollar index rose by 0.3% to 109.8, reflecting strong investor demand.
The offshore Chinese yuan dropped by 0.5% to 7.35 per US dollar, Reuters reported. The currency had already lost 1% last week, compounding concerns over trade tensions.
The turbulence in currency markets followed a weekend announcement by US President Donald Trump imposing fresh tariffs. A 25% tariff was levied on Mexican and most Canadian imports, alongside a 10% tariff on goods from China, set to take effect from Tuesday.
In response, Mexico and Canada, the United States' largest trading partners, announced retaliatory measures, while China warned of unspecified countermeasures.
The rupee also faced headwinds due to a surge in global crude oil prices. Brent crude oil climbed by 0.73% to $76.22 per barrel, while US West Texas Intermediate (WTI) crude futures rose by 1.74% to $73.79 per barrel.
Concerns about an escalating trade war contributed to the upward momentum in oil prices, further pressurising the Indian currency.
In the recently announced Union Budget 2025-2026, the Indian government reaffirmed its commitment to fiscal discipline by reducing the fiscal deficit target to 4.4% of GDP for FY 2025-26, down from 4.8% in the previous fiscal year.
The move is expected to bolster investor confidence, even as external challenges such as rising oil prices and global trade tensions continue to weigh heavily on the economy.
(By arrangement with Livemint.com)