The Indian rupee fell to 87.80/USD as US-India trade tensions escalated after President Trump threatened more tariffs. RBI intervention helped limit the slide, but fears over oil prices and foreign outflows persist ahead of the RBI rate decision
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The Indian rupee fell more on Tuesday as trade tensions with the United States worsened, although central bank intervention likely kept the currency from falling below record lows.
The rupee closed at 87.8000 against the US dollar, down 0.2% from its Monday closing of 87.6550. The local currency plummeted to 87.8850 on Tuesday, barely shy of its all-time low of 87.95 set in February.
The Reserve Bank of India assisted in mitigating some tariff-related pressure on the currency through interventions by state-run banks, according to a trader at a state-owned banking.
US President Donald Trump on Monday again threatened to substantially raise tariffs on Indian goods, citing the country’s continued purchases and resale of Russian oil, after announcing a surprise 25% tariff on Indian imports last week.
In response, India’s foreign ministry said it would take “all necessary steps” to protect national interests and economic security, escalating a trade row between the two countries.
“As fears of more expensive crude oil loom, the Indian rupee stands at a crossroads amid rising geopolitical tensions,” said Abhishek Goenka, chief executive of IFA Global.
Traders and analysts said that persistent foreign outflows may accelerate, putting further strain on the rupee if talks stall.
The RBI’s interest rate decision on Wednesday could also influence the currency’s trajectory.
Meanwhile, Asian currencies traded mixed as the dollar recouped some of its losses on Tuesday. The Philippine peso dropped 0.6% after inflation hit the lowest in nearly six years. The Malaysian ringgit gained more than 0.2%, while the Indonesian rupiah was little changed.
The dollar index was down 0.3% at 98.967, as of 1007 GMT.
