New Delhi
The Indian rupee plunged to an all-time low on Friday, closing at 88.20 against the US dollar, breaching the historic 88-mark for the first time. During intra-day trading, it touched a record low of 88.29, surpassing February’s previous record of 87.95. The sharp decline was driven by growing market concerns over the United States’ imposition of steep tariffs on Indian exports.
Traders noted that intervention by the Reserve Bank of India through dollar sales helped the rupee recover partially. Kunal Sodhani, Head of Treasury at Shinhan Bank, cited factors such as heavy equity outflows (INR 29,000 crore in August), US tariff pressures, month-end oil demand, and rupee-yuan dynamics as contributing to the currency’s weakness. The rupee also fell to 12.3862 against the Chinese yuan, declining about 6% over four months. A weaker rupee relative to the yuan could slightly benefit Indian exporters in US-bound sectors like textiles and engineering goods, offsetting some tariff impacts.
Economists warn that the 50% US tariffs may reduce India’s GDP growth by 60-80 basis points if maintained for a year. Despite the pressure, RBI’s strong foreign exchange reserves provide a buffer to curb excessive volatility, though sustained weakness may continue in the near term.
