Indian Rupee Hits Five-Month Low Amid US Tariff Concerns

Rupee Declines Against the Dollar

On Thursday, the Indian Rupee experienced a significant drop, reaching a five-month low against the US dollar. This decline was primarily driven by apprehensions surrounding the recently announced 25% tariff on Indian goods by the United States.

The trading day commenced with the Rupee at 87.69 against the dollar, a decrease from the previous day's close of 87.42.

The repercussions of President Trump's tariff announcement were also evident in the stock market, where the benchmark index, Sensex, plummeted by over 500 points, or 0.6%, during early trading hours. The Nifty index similarly fell by 0.6%, dipping below the 24,700 mark by 9:50 AM.

Investors faced substantial losses, with reports indicating a cumulative loss of Rs 5 lakh crore within the first 15 minutes of trading.

In addition to the tariff, Trump mentioned that India would incur a penalty for its substantial military purchases from Russia amid the ongoing conflict in Ukraine, although he did not disclose the specifics of this penalty.

The US has reiterated its intention to impose reciprocal tariffs on various nations that have not established separate trade agreements by the August 1 deadline.

Earlier in April, Trump had proposed increased tariffs but later reduced them to 10% to facilitate negotiations. Despite this extension, only a few agreements have been reached.

On Monday, Trump indicated plans to introduce a global baseline tariff ranging from 15% to 20% for countries lacking trade deals with the US.

Previously, Trump had suggested that India might soon finalize a significant trade agreement with the US, with the White House confirming that discussions were nearing completion.

In May, an Indian delegation led by Union Commerce Minister Piyush Goyal visited the US to negotiate the deal, followed by a US negotiating team visiting India in June.