Mumbai, Jul 30 (PTI) The rupee plunged 89 paise, logging its steepest single-day fall in over three years, and closed at an all-time low of 87.80 against the US dollar on Wednesday after America announced a sweeping 25 per cent tariff on Indian imports in the absence of a trade deal ahead of the August 1 deadline.
Forex traders said month-end dollar demand from importers and sustained foreign fund outflows also weighed on the local unit.
At the interbank foreign exchange, the domestic unit opened at 87.10 and touched an intra-day low of 87.05 against the greenback.
At the end of Wednesday’s trading session, the local unit settled at a fresh all-time low of 87.80, down 89 paise over its previous closing price. This was rupee’s steepest single-day fall since February 24, 2022 when it had lost 99 paise against the dollar.
On Tuesday, the rupee declined to an over four-month low and closed 21 paise weaker at 86.91 against the US dollar.
Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said, “We expect the rupee to slide further amid uncertainty over the trade deal between India and the US. Rising global oil prices and foreign outflows may also keep the rupee under the leash.” Moreover, investors remained on the sidelines ahead of the US Federal Reserve and Bank of Japan’s monetary policy decision this week.
“Traders may take cues from Q2, 2025 GDP, ADP non-farm employment and pending home sales data from the US. Investors may remain cautious ahead of the US FOMC meeting and Bank of Japan’s monetary policy decision,” Choudhary said, adding that USDINR spot price is expected to trade in the range of 87-87.90.
Dilip Parmar, Senior Research Analyst, HDFC Securities, attributed the sharp depreciation in rupee to increased month-end dollar demand and outflows from foreign funds.
“Adding to the negative sentiment, comments from US President Trump, suggesting that India could face tariffs of 20 to 25 per cent, further weighed down the rupee,” Parmar said, adding, “the breaching of the psychological level of 87, coupled with a technical breakout, spurred greater dollar demand from importers and triggered short covering.” US President Donald Trump on Wednesday announced the imposition of a 25 per cent tariff on all goods coming from India starting August 1, plus an unspecified penalty for buying military equipment and crude oil from Russia.
In the domestic equity market, the 30-share BSE Sensex advanced 143.91 points, or 0.18 per cent, to close at 81,481.86, while the Nifty rose 33.95 points, or 0.14 per cent, to settle at 24,855.05.
Foreign institutional investors (FIIs) offloaded equities worth Rs 850.04 crore on a net basis on Wednesday, according to exchange data.
A US team will visit India on August 25 for the next round of negotiations for the proposed bilateral trade agreement between the two countries.
Though the team is coming at the end of next month, both sides remain engaged to iron out differences for an interim trade deal before August 1, which marks the end of the suspension period of tariffs imposed by Trump on dozens of countries, including India.
The prospects for an interim deal may look dim as US Trade Representative Jamieson Greer has said more negotiations will be needed with India on a trade pact.
Indian exporters face an additional duty of 16 per cent — on top of the existing 10 per cent. They said in the absence of clarity on the penalty’s scope, Indian exporters and their US buyers are unable to accurately calculate landed costs or plan how to absorb the elevated tariff burden. PTI DRR HVA
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