On Monday, the rupee saw its biggest one-day drop since January 12, plunging 61 paise, or 0.71%, to settle at 85.8425 versus the dollar. The decline occurred when US President Donald Trump’s expansive tariff proposals rocked the world’s financial markets, sending Asian stocks and currencies down.
The rupee is affected by a growing trade war brought on by Donald Trump’s tariff policies. Increased uncertainty has caused a risk-off mentality, which has caused outflows from emerging markets. The greenback rose against the majors as the dollar index swiftly recovered over 103 levels.
He noted that the rupee could suffer from any significant decline in the value of the Chinese yuan. The dollar index, which compares the value of the US dollar to a basket of six other currencies, increased by 0.2% to 103.2. The Chinese yuan fell 0.3% to a low that was over four months old. The worst-hit major Asian currency was the Philippine peso, which fell 1.06%, followed by the Malaysian ringgit, which fell 1.04%. The Japanese yen dropped 0.1%, and the South Korean won dropped 0.19%. The Taiwanese dollar strengthened by 0.14%, defying the trend.
The native currency may also be impacted by FII selling pressure. At lower levels, nevertheless, the rupee might be supported by weak crude oil prices.
The rupee fell at the same time that oil prices continued to plummet. Both the US tariffs and the OPEC+ decision to speed up output increases caused Brent crude, the world’s benchmark for oil, to fall 3% to $63.59 per barrel in futures trading.
According to analysts, the RBI has enough foreign exchange reserves to protect the rupee. The most recent data shows that reserves increased by $6.596 billion to $665.396 billion for the week ending March 28.
