The Indian rupee clawed back 3 paise from its record low to close at 87.08 (provisional) against the US dollar on Tuesday as the American currency index retreated from its high levels following President Donald Trump’s decision to pause tariffs on Mexico and Canada.
Forex traders noted that the US dollar index, which had climbed above the 109.88 level, pulled back to around 108 after Trump’s announcement of a temporary tariff suspension for 30 days.
Starting the day at 86.98, the rupee hit an intraday low of 87.13 against the greenback. However, it managed to end the session at 87.08 (provisional), gaining 3 paise from its previous close.
The rupee had taken a hit on Monday, plummeting by 49 paise to settle at an all-time low of 87.11 against the US dollar.
Analysts anticipate a negative bias for the rupee due to the uncertainty surrounding US trade tariffs. Any escalation of the tariff conflict by China could impact global risk sentiment, strengthening the US dollar as investors seek safe havens. However, potential central bank interventions may offer support to the rupee, according to Anuj Choudhary, a Research Analyst at Mirae Asset Sharekhan.
Investors are also advised to exercise caution ahead of the Reserve Bank of India’s upcoming monetary policy meeting scheduled for this week.
Trump’s decision to postpone tariff threats against Mexico and Canada for 30 days came as a relief to the markets. Finance Minister Nirmala Sitharaman reiterated that the Indian rupee’s value is market-driven and denied any devaluation, characteristic of fixed exchange rate regimes.
Amidst concerns over the rupee’s depreciation, Finance Secretary Tuhin Kanta Pandey reassured that the Reserve Bank of India is effectively managing the local currency’s volatility.
The domestic equity market surged on Tuesday, with the BSE Sensex closing 1.81% higher at 78,583.81 points and the Nifty climbing 1.62% to 23,739.25 points.
Foreign institutional investors (FIIs) divested equities worth ₹3,958.37 crore in the capital markets on Monday, as per exchange data.
On the macroeconomic front, India’s manufacturing sector recorded robust growth at the start of 2025, reaching a six-month high in January. The HSBC India Manufacturing Purchasing Managers’ Index (PMI) rose to 57.7, supported by a significant increase in new export orders, marking the steepest upturn since February 2011.
