The Indian rupee fell to a record low on Monday after U.S. President Donald Trump imposed tariffs on imports from Mexico, Canada, and China, heightening fears of a global trade war. The rupee touched 87.28 per U.S. dollar before closing at 87.1850, marking its steepest single-day drop since January 13.
Asian currencies weakened as the dollar surged, with the Mexican peso plummeting over 2% and the offshore Chinese yuan declining 0.3%. Global equity markets also tumbled, with Asian and European stocks in the red and U.S. equity futures pointing lower.
Despite intermittent dollar sales by state-run banks, the Reserve Bank of India (RBI) refrained from heavy intervention, signaling a possible shift towards allowing the rupee to align with market trends. Analysts expect further currency adjustments amid persistent economic headwinds.
With Trump’s tariffs set to take effect on Tuesday, market watchers anticipate continued volatility, with ING Bank noting that the dollar index (DXY) is likely to remain strong, having climbed over 1% to 109.7.
