• MyLove @M
• 03 Feb, 2025

The Indian Rupee has taken a massive hit in the currency market, recording yet another sharp decline against the US Dollar. The fall comes after new trade tariffs imposed by the US on goods from Canada, Mexico and China. On Monday, the Rupee plunged by 67 paise touching Rs 87.29 per USD, marking its lowest level in recent history.

Global Trade War Fears Impacting Indian Rupee

The latest slump in the Indian Rupee is directly linked to US President Donald Trump’s decision to increase tariffs on goods from major trading partners, including Canada, Mexico and China. The Forex market is now fearing a potential global trade war, which has led to weakened investor confidence in emerging market currencies.

Last Friday the Rupee was relatively stable, closing at Rs 86.62 per USD. However as soon as the market opened on Monday the Rupee depreciated further initially starting at Rs 87 per USD before declining further.

Why Is the Rupee Falling.?

This is not the first time the Rupee has witnessed a major fall. In April, the currency also saw a steep decline reaching Rs 83.53 per USD due to rising concerns over Middle Eastern conflicts and the strengthening of the US Dollar.

Experts believe that multiple factors have contributed to the recent drop in the Rupee's value

Strengthening US Dollar – The return of Donald Trump has fuelled a stronger US economy, causing the Dollar to rise.

Global Oil Prices – Rising crude oil prices have impacted India's import costs, further pressuring the Rupee.

Stock Market Volatility – The Indian stock market is facing selling pressure due to foreign investors pulling out funds.

According to Anshul Chandak, Treasury Head at RBL Bank, this trend may continue for another 6 to 8 weeks with more capital outflows from the Indian market.

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Stock Market Also Under Pressure

It’s not just the Indian Rupee—Trump’s new trade policies have also had a negative impact on the Indian stock market. Analysts believe that despite the positive effects of the Union Budget, the uncertainty caused by trade restrictions has overshadowed market sentiment. Experts predict that the Indian stock market may remain under pressure for the next few weeks.

With the Rupee hitting record lows, investors and businesses are concerned about the future of the Indian economy. The global trade tensions and fluctuating oil prices will likely play a major role in shaping India's financial stability in the coming months.