Indian Rupee Hits Record Low: Impact of Trump’s Tariffs

Trump’s tariff imposed on China, Canada and Mexico impacts downfall of Indian Rupee

The Indian rupee plunged to a historic low of over 87 against the US dollar on Monday. It reacted sharply to new tariffs imposed by US President Donald Trump. The currency hit an all-time low of ₹87.1450 per dollar, declining by 0.6% from Friday’s close. This marks a nearly 4% fall since October 2024. Experts warn of continued pressure on the rupee in the coming weeks.

Anshul Chandak, head of treasury at RBL Bank, stated that macroeconomic factors are stacked against the Indian currency. He predicts further depreciation over the next 6–8 weeks. The steep drop was triggered by Trump’s executive orders issued over the weekend. These orders imposed a 25% tariff on imports from Mexico and Canada. Additionally, a 10% tariff was placed on Chinese goods, effective Tuesday. These measures have strengthened the US dollar. This has affected global currencies, including the Indian rupee. The rupee and the Chinese yuan often move in tandem. The dollar index, which tracks the greenback against six major currencies, surged by 0.3% to 109.8.

Trump’s tariff policy has reignited fears of a full-scale trade war. Global brokerage firm Morgan Stanley has warned that risks of escalation have increased. The firm noted that Asia remains particularly vulnerable. This vulnerability is due to its high trade exposure. Seven regional economies are running significant trade surpluses with the US.

The fallout extended beyond currency markets, as Indian stock markets also saw sharp declines. The Union Budget 2025 had a positive impact. Yet, Trump’s tariffs overshadowed market sentiment. This raised concerns over potential foreign institutional investor (FII) outflows. Analysts predict continued volatility in the financial markets as global trade tensions intensify.