Rupee hits record low of 87.29 against US dollar in early trade as Trump tariffs stoke trade war fears

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At the interbank foreign exchange, the rupee opened at 87.00 to the dollar and slipped further to 87.29 in initial deals. Meanwhile, it settled flat at 86.62 against the American currency on Friday.

Trump slapped Canada and Mexico with 25% duties and China with a 10% duty.

This was the first strike in what could be a destructive global trade war, the report quoted forex traders as having said.

They added that the rupee also continued to face pressure due to sustained foreign fund outflows worth ₹1,327.09 crore on Saturday alone, and the broad strength of the American currency in the overseas markets due to dollar demand from oil importers and weak risk appetite.

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Global oil benchmark Brent crude rose 0.71% to $76.21 per barrel in futures trade.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 1.30% higher at 109.77.

“The range for the day is expected to be between 86.65/87.00 with the Reserve Bank expected to intervene to cool off the dollar bids,” the report quoted Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP as saying.

India’s forex reserves increased by $5.574 billion to $629.557 billion in the week which ended on January 24, the Reserve Bank said on Friday.

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However, the reserves had dropped $1.888 billion to $623.983 billion overall.

The reserves’ declining trend has been going on for the last few weeks, with the drop attributed to revaluation, along with forex market interventions by the central bank to help reduce volatilities in the rupee.