MUMBAI: The rupee fell for the fifth straight session on Tuesday jittered by the weak sentiment as traders and exporters braced for the punitive 25% tariffs that are kicking in from Wednesday. The currency closed 18 paise lower at 87.74 against the dollar.
The rupee has lost 2.5% in the current financial year so far and 2.39% in 2025 so far. In August, it fell around 0.11% against the dollar.
On Monday too, the rupee pared initial gains to settle 4 paise lower at 87.56 against the dollar. This was in spite of the fact the broader market closed in the green. The unit opened for trade down 22 paise at 87.78.
The weakness in the rupee came after a draft notice from the US department of homeland security outlining plans by US president Donald Trump to impose a 50% tariff on Indian goods from August 27 as a punitive measure for Indian refiners buying the partially discounted Russian crude oil.
The increased levies are set to apply on Indian goods "entered for consumption, or withdrawn from warehouses for consumption, on or after 12:01 am eastern on August 27," the draft notice said.
The tariff woes also had its more choppy impact on the broader stock markets with the equity benchmarks—the Sensex and the Nifty--bleeding by more than 1% from the previous close in the green.
While the benchmark Sensex closed 1.04% down or 839 points at 80,786, the Nifty bled 1.02% or 258 points to close at 24,712 points on Tuesday.
"With the bias still tilted toward depreciation, the rupee has already breached the 87.50 mark. The next hurdle stands at 87.80, a level where the RBI has often acted as a strong barrier against further weakness," CR Forex Advisors Amit Pabari said.
The fall of the rupee came even as the dollar dropped overnight in the US after the feud between Trump and the Federal Reserve intensified following the firing of Fed governor Lisa Cook on allegations that she falsified documents on mortgage applications. Another reason was Trump’s threatening to put export curbs on chips in retaliation against other nations' digital services taxes.
The dollar index, a measure of the greenback against a basket of six major currencies, was down 0.14% at 98.29.