US President Donald Trump’s decision to impose 25 % import tariffs on Canada, Mexico and China and the countries’ retaliatory measures could lead to a potential trade war on a global level. Amid Trump’s ongoing tariff war, the Indian rupee plummeted 67 paise to hit a record low against the USD in early trade.
The rupee depreciated 67 paise to hit record low of 87.29 against the US dollar in early trade on Monday following Trump Tariffs on Canada Mexico and China triggered fears of a broad trade war. Donald Trump slapped Canada and Mexico with 25 % duties and China with a 10 % duty, The move was the first strike in what could usher a destructive global trade war, forex traders said.
They added, “The rupee continued to face pressure due to sustained foreign fund outflows and the broad strength of the American currency in the overseas markets due to unabated dollar demand from oil importers and weak risk appetite”. At the interbank foreign exchange, the rupee opened at 87.00 and slipped further to 87.29 against the greenback in initial deals, a plunge of 67 paise from its previous close.
On Friday, the rupee settled flat at 86.62 against the American currency. “The start of the week saw financial markets on edge as US President Donald Trump followed through on his tariff threats, imposing duties on imports from Mexico, Canada, and China,” CR Forex Advisors MD- Amit Pabari said. This trade war has fuelled risk aversion, propelling safe-haven demand for the US dollar, which has surged toward 109.50 levels, Pabari added.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 1.30 % higher at 109.77. “The US dollar surged on Trump Tariffs sending global FX to multi-year lows as the Euro fell to 1.0224, GBP to 1.2261 and Yen to 155.54. The US dollar index rose to 109.77, while US 10-year yields were at 4.4980 per cent.
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