The Indian rupee fell to a record low on Monday as concerns over potential U.S. trade tariffs triggered losses across regional currencies, prompting likely intervention from the Reserve Bank of India (RBI), traders reported.
The rupee slid to 87.95 per U.S. dollar in early trading, breaching its previous all-time low of 87.5825 recorded last week. By 9:40 a.m. IST, the currency was quoted at 87.9050, marking a 0.5% decline for the day.
State-run banks were observed selling U.S. dollars before the local spot market opened, an action traders attributed to RBI intervention aimed at stabilizing the currency. While the rupee was poised to weaken further past the 88 level, these interventions helped it hold above this psychological threshold.
On Sunday, U.S. President Donald Trump announced plans to impose fresh 25% tariffs on steel and aluminum imports and introduce reciprocal tariffs on all countries matching their respective trade levies. This news drove the dollar index higher to 108.3, while Asian currencies weakened between 0.1% and 0.6%.
Since Trump’s victory in the U.S. elections last November, the rupee has depreciated by approximately 4.5%. The decline has been exacerbated by slowing economic growth and persistent foreign capital outflows.
Foreign investors have offloaded more than $7.5 billion from Indian stocks and bonds on a net basis so far this year, adding pressure on the rupee.
Amid these headwinds, the RBI has frequently intervened to curb excessive currency volatility. However, these efforts have strained India’s foreign exchange reserves, which are hovering near an 11-month low.
“We believe the risks to INR over coming months are skewed towards relative weakness. If the broad USD were to weaken, we believe the downside in USD/INR would be mitigated by active RBI FX purchases,” Nomura noted in a report.
