The draft notice from the US Department of Homeland Security rekindled concerns over trade relations, pushing importers to step up dollar purchases.
Traders noted the move leaves the rupee close to its lifetime low of 87.95.
Market participants highlighted three key factors driving the fall:
- Tariff shock – The proposed 25% levy on Indian goods has removed hopes of a last-minute compromise, triggering risk aversion.
- Geopolitical strain – With peace talks between Russia and Ukraine stalling, the outlook for sanctions and trade restrictions has worsened.
- Investor flows – Foreign Institutional Investors (FIIs) offloaded equities worth ₹2,466 crore on Monday (August 25), adding to pressure on the currency.
The weakness came despite a softer dollar index, which slipped 0.05% to 98.38 after US President Donald Trump dismissed Federal Reserve Governor Lisa Cook.
Brent crude traded marginally lower at $68.52 a barrel, offering little respite.
“The rupee has breached 87.50, and the next hurdle is 87.80 — a level where the RBI has previously stepped in. With the bias still tilted towards depreciation, central bank intervention will be closely watched,” said Amit Pabari, Managing Director at CR Forex Advisors.
Equities mirrored the cautious mood. The Sensex dropped 547 points to 81,089, while the Nifty declined 179 points to 24,789.
Analysts said the RBI’s response will be crucial in containing volatility as the currency edges near record lows.
–With agencies inputs
