Rupee closes lower as tariff tensions weigh; ends at 87.80/$

Indian Rupee today: The domestic currency closed 14 paise lower at 87.80 against the dollar on Tuesday, according to Bloomberg

The Indian Rupee ended lower on Tuesday, extending early losses, as fresh pressure emerged following US President Donald Trump's escalation of tensions with India over its continued oil imports from Russia.

 

The domestic currency closed 14 paise lower at 87.80 against the dollar on Tuesday, according to Bloomberg. The rupee has declined 2.6 per cent so far in the calendar year and recorded its worst monthly fall in July since September 2023. 

 

The domestic currency remained under pressure and is likely to stay weak this week after Trump signalled the possibility of higher tariffs, analysts said. 

 

Trump, in the social media platform Truth Social, threatened to “substantially” raise tariffs on Indian goods, accusing the country of profiting from the resale of Russian oil and ignoring the human toll in Ukraine.

 

 

India, however, dismissed Trump's remarks, calling them “unjustified and unreasonable.” The Ministry of External Affairs (MEA) stressed that India’s energy ties with Russia are driven by national "necessity" and are far smaller in scale compared to trade between Russia and the West. 

 

Rupee traded weakly as panic gripped markets following a late-evening post by Trump hinting at higher tariffs on India, according to Jateen Trivedi, VP Research Analyst - commodity and currency at LKP Securities. "Additionally, expectations that the US may pressure India to reduce Russian oil imports sparked fears of a higher import bill, pushing the rupee briefly below the 88 mark overnight."

 

"The rupee is expected to trade in the 87.40-88.25 range," Trivedi said. 

 

The currency has also faced sustained pressure from foreign portfolio investors (FPIs) who extended their selling streak in equities. FPIs remained net sellers for the 11th straight session on Monday, selling equities worth ₹2,403 crore in the previous session. In this calendar year so far, global funds have sold stocks worth ₹1.03 trillion, as per NSDL data. 

 

Meanwhile, the focus will be on RBI Governor Sanjay Malhotra as the Monetary Policy Committee (MPC) begins its meeting yesterday, August 4, to decide on key interest rates. The RBI is likely to remain status quo as per a Business Standard poll, with all analysts expecting a further reduction in the 2025-26 (FY26) inflation forecast.  

 

The dollar index, the measure of the greenback against a basket of six major currencies, was up 0.17 per cent at 98.94. 

 

In commodities, crude oil prices extended their three-day fall amid looming trade tensions between India and the US. Brent crude price was down 1.12 per cent at 67.99 per barrel, while WTI crude prices were lower by 1.30 per cent at 65.43, as of 3:30 PM IST.