India Feels the Pinch: Rupee Plunges to Record Low on Trump's Tariff Threats

New Delhi (The Uttam Hindu) : In a dramatic turn of events, the Indian rupee plummeted to a record low of 87.29 against the US dollar on Monday, depreciating by a staggering 67 paise. This sharp decline comes on the heels of US President Donald Trump's decision to impose tariffs on Canada, Mexico, and China, sparking widespread fears of a broad trade war. The tariffs, which include a 25% duty on goods imported from Mexico and Canada, and a 10% duty on imports from China, have sent shockwaves through global markets. The move is seen as a major escalation in the ongoing trade tensions between the US and its major trading partners.

Forex traders and analysts are warning that Trump's tariffs could be the first strike in a destructive global trade war, with far-reaching consequences for the Indian economy. "The rupee's decline is a direct result of the trade war fears triggered by Trump's tariffs," said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisory LLP. "As the trade war escalates we can expect the rupee to remain under pressure." The rupee's decline was also attributed to outflows from Indian equities, as investors scrambled to safe-haven assets such as the US dollar. The dollar index rose to 109.825 in early trade up from 108.370 in the previous session.

The Indian government has yet to respond to the developments, but experts are warning that the country's economy could be severely impacted by a prolonged trade war. "India's exports could take a hit and the country's trade deficit could widen," said Dr. Ashutosh Datar, a leading economist. "The government needs to take proactive measures to mitigate the impact of the trade war on the Indian economy." As the situation continues to unfold investors and traders are keeping a close watch on the market developments. The rupee's record low has sparked concerns about the country's economic stability and experts are warning that the situation could worsen if the trade war escalates further.

MARKET REACTION

- Rupee depreciates by 67 paise to record low of 87.29 against US dollar

- Dollar index rises to 109.825 in early trade

- Indian equities witness outflows as investors scramble to safe-haven assets

- Global markets witness sell-off as trade war fears escalate

EXPERT OPINION

- "The rupee's decline is a direct result of the trade war fears triggered by Trump's tariffs. As the trade war escalates, we can expect the rupee to remain under pressure." - Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisory LLP

- "India's exports could take a hit and the country's trade deficit could widen. The government needs to take proactive measures to mitigate the impact of the trade war on the Indian economy." - Dr. Ashutosh Datar, leading economist