The Indian rupee on Thursday slumped to a fresh all-time low at 88.4425 against the USD, reflecting the pressure from steep US tariffs that have rattled Asia’s third-largest economy. The rupee came down 0.39 per cent from its previous close of 88.1000. The currency had earlier touched 88.36, its previous record low, last Friday.
Punitive tariffs imposed by Washington last month have undermined investor confidence, making the rupee one of Asia’s weakest performers. Overseas investors have pulled USD 11.7 billion from India’s debt and equity markets so far this year. The Indian government has responded with cuts in consumption taxes to soften the blow, while both New Delhi and Washington are exploring a resumption of trade talks.
Exporters, however, remain uncertain about order flows, and importers are stepping up their hedging activity, adding stress to the forex market.
The Reserve Bank of India has intervened repeatedly, selling dollars to slow the rupee’s slide. Bankers say the measures are not aimed at defending a specific level but to ensure the depreciation remains ‘measured’ and does not unsettle businesses or investors. The rupee’s weakness stands in contrast to regional peers, most of which have gained on expectations of a US Federal Reserve rate cut next week.
“Weakness in the rupee is likely to persist in the near term, considering the impact of the US tariffs on labour-intensive sectors,” said Abhishek Goenka, founder and CEO of IFA Global. Most Asian currencies fell on Thursday while the dollar index edged higher ahead of US inflation data.
(With Reuters’s inputs)
