Indian Rupee Hits Record Low Amid Trade Tariff Concerns and Persistent Outflows

The Indian rupee fell to an all-time low of 86.65 per dollar on Friday, pressured by the threat of U.S. trade tariffs under President Donald Trump and persistent foreign portfolio outflows. The decline eclipsed the previous record low of 86.6475 set earlier this month. The dollar index rose to 108.2, further weakening most Asian currencies as Trump announced plans to impose tariffs on Canada and Mexico, with potential new levies on China also under consideration.
To mitigate losses, the Reserve Bank of India (RBI) likely intervened through state-run banks offering dollars, traders said. The rupee’s performance was further impacted by nearly $9 billion in net foreign portfolio outflows from local stocks and bonds in January. Amid these pressures, the rupee has declined 1.2% this month, underperforming regional peers as expectations of an RBI rate cut in its upcoming policy meeting weigh on sentiment.
Looking ahead, the rupee is expected to remain volatile in the range of 86.20-86.80, according to Amit Pabari, managing director at CR Forex. Key factors influencing its trajectory include India’s federal budget announcement on February 1 and developments around U.S. trade tariffs. Meanwhile, dollar-rupee forward premiums edged higher ahead of the RBI’s $5 billion 6-month dollar/rupee buy-sell swap auction, which is expected to see robust interest from banks and corporate treasuries.
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