Rupee Drops to Record Low of 87 against USD Amid Trump Tariffs

On February 3, 2025, the Indian rupee hit an all-time low, opening below 87 against the US dollar. This significant depreciation resulted from US President Donald Trump’s new tariffs on several nations, including Mexico, Canada, and China. The rupee’s steep decline is from its previous close of 86.61 per dollar.

Investors fear a potential trade war, strengthening the US dollar and increasing global market volatility. The offshore Chinese yuan, closely watched by rupee traders, also fell by 0.54% to 7.3585 per dollar. Analysts warn the rupee could depreciate further if the tariff war escalates.

The Reserve Bank of India (RBI) will announce its policy decision on February 7. Market participants expect a rate cut of 25 basis points. Meanwhile, the Indian government has set a fiscal deficit target of 4.4% of GDP for FY26, down from the current year’s target of 4.8%.

These developments add pressure on emerging market currencies, including the Indian rupee, as global investors seek more stable investment avenues.