Indian Rupee logs worst session since February 2023; Ends at 85.84/$

The Indian rupee logged its worst session in over 26 months on Monday as concerns around global trade peaked with China’s retaliatory tariffs on US goods. 

 

The domestic currency weakened 60 paise to end at 85.84 against the greenback after closing at 85.24 on Friday, according to Bloomberg data. This marks the worst single session for the currency since February 6, 2023. The currency has depreciated by almost the same level on January 13 this year. 

 

After US President Donald Trump hit China with a 54 per cent to cripple exports to the US, Beijing retaliated with a 34 per cent tariffs on all US imports. Meanwhile, the Reserve Bank of India's (RBI's) Monetary Policy Committee (MPC) meeting starting today will be on investors' radar. 

 

The heightened uncertainty has triggered risk-off sentiment, leading to outflows from emerging markets, including India, thus weakening the rupee, according to Jateen Trivedi, VP research analyst - commodity and currency, LKP Securities. “Until there's clarity or resolution in tariff negotiations, markets are likely to remain volatile.” The rupee is expected to trade in a wide range of 85.25–86.25, with elevated volatility anticipated in the near term, he said. 

 

The dollar index — a measure of the value of the US dollar relative to a basket of foreign currencies — was down 0.14 per cent to 102.88. 

 

Meanwhile, a foreign institutional investor (FII) outflow of ₹3,483.98 crore from Indian equities also sparked pressure on the rupee on Friday. Further, hawkish signals from key Federal Reserve officials cast a wider shadow on emerging market currencies, according to Amit Pabari, managing director at CR Forex Advisors. 

 

The decline in the rupee came even as the oil prices extended their plunge. Crude oil prices continued their rout as Saudi Arabia slashed its flagship crude price by the most in more than two years amid global recession fears. Brent crude oil was down 3.16 per cent to $63.51 per barrel, while WTI crude was down 3.44 per cent at 59.86 per barrel as of 3:44 PM IST.  

 

On the equities front, the benchmark Indian equity indices plunged sharply, weighed down by a broad-based sell-off across counters, settling in the red for the third consecutive session.

 

Amidst the rupee’s volatility, India’s foreign exchange reserves jumped by $6.596 billion to reach $665.396 billion in the week ending March 28—marking the fourth consecutive weekly gain, Pabari noted. “This hints at possible RBI intervention near the 85.00 mark, a level the central bank seems to be defending to quietly accumulate reserves.”