On Monday, the Indian rupee plunged by 67 paise to hit a record low of 87.29 against the US dollar. This sharp depreciation came in the wake of US President Donald Trump's decision to impose tariffs on Canada, Mexico, and China, sparking fears of a global trade war. Trump’s tariffs—25% on Canada and Mexico, and 10% on China—sent shockwaves through the financial markets. As the US dollar gained strength amid risk aversion, the rupee faced mounting pressure due to sustained foreign fund outflows and a strong dollar demand from oil importers. Forex traders noted the broader global impact, with the US dollar rising sharply as a safe-haven asset, pushing other currencies to multi-year lows.
 

The rupee’s sharp fall from Friday’s close of 86.62 was attributed to a combination of factors, including the escalating trade tensions and a surge in the US dollar index, which rose by 1.30% to 109.77. In Asia, other currencies such as the Chinese Yuan, Indonesian Rupiah, and South Korean Won also witnessed significant declines. As oil prices rose, further straining India’s import costs, the rupee remained vulnerable. The Reserve Bank of India was expected to step in to stabilize the rupee, with the day's range forecasted between 86.65 and 87.00.
 

On the domestic front, the equity markets mirrored the rupee’s decline, with the BSE Sensex and Nifty falling sharply due to investor concerns over the global economic impact of the trade war. Foreign institutional investors (FIIs) also withdrew significant funds, exacerbating the pressure on the rupee. Meanwhile, India's foreign exchange reserves saw a slight increase, but the overall trend has been a decline in reserves due to market interventions by the Reserve Bank of India to curb currency volatility.