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Rupee hits five-month low on US tariff warning, oil spike; ends at 87.42/$
The domestic currency closed 60 paise lower at 87.42 against the dollar on Wednesday, the lowest level since February 28 this year, according to Bloomberg. The local unit has depreciated 1.9 per cent so far this month and 2.12 per cent in this calendar year so far. This is so far the worst monthly fall since September 2022, when it fell 2.32 per cent.
The weakness in currency came after Trump's statement that India may face a tariff rate of 20 to 25 per cent. He, however, cautioned that the final levy still was not finalised.
India is racing to finalise a trade deal with the US as the 1 August deadline approaches. Officials from both countries are engaged in continuous negotiations, although major disagreements remain unresolved.
Rupee traded weak, breaching the 87.40 mark as rising crude prices and a stronger dollar index weighed on sentiment, according to Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities.
Market participants remain cautious ahead of the US Federal Reserve's policy announcement tonight, with additional key US data lined up this week likely to keep volatility elevated, he said. "The rupee is expected to trade within a broader range of 87.00-87.70."
Adding to the downward pressure are persistent foreign portfolio investor (FPI) outflows from Indian equities, with capital being redirected toward developed markets that are currently trading at record highs, analysts noted.
FPIs have sold Indian equities for the seventh straight session in the secondary market, according to data from NSE. On Tuesday, FPIs offloaded stocks worth ₹4,636.60 crore. In the last seven sessions, global funds have sold stocks worth ₹24271.98 crore.
The dollar index is poised for the best month this year, with the measure of the greenback against a basket of six major currencies, down 0.05 per cent at 98.83.
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