FX.co ★ Rupee Slides Toward Record Lows as US Tariffs Hit

The Indian rupee depreciated past 87.5 against the dollar on Wednesday, marking its fifth consecutive day of decline, as concerns were exacerbated by the initiation of new US tariffs on Indian exports. These new duties, effective today, increase tariffs to 50% on goods valued at over $48 billion, impacting sectors such as textiles, clothing, gems and jewelry, shrimp, leather, footwear, chemicals, and machinery. Exempt sectors include pharmaceuticals, energy products, and electronics. Exporters have voiced concerns that these tariffs could make Indian goods less competitive in the US market, potentially benefiting rival countries such as Vietnam, Bangladesh, and China, and threatening employment within key labor-intensive sectors. The Indian government has maintained a cautious approach, with Prime Minister Modi emphasizing the importance of 'swadeshi' or self-reliance to counter external economic pressures. Despite robust demand for the dollar, likely interventions by the Reserve Bank of India (RBI) have helped curtail further losses. Analysts predict continued downward pressure in the face of this trade shock and ongoing supply-demand imbalances.