Trump’s new tariffs on India and penalties on Russian oil imports are putting pressure on the rupee
New Delhi: The rupee fell 29 paise to 87.95 against the US dollar in early trade on Tuesday as a result of US President Donald Trump’s decision to impose fresh tariffs on India and additional restrictions on oil imports from Russia, according to a PTI report.
The Indian rupee came under pressure after Trump’s announcement that he may impose more tariffs on India for continuing to buy Russian oil, according to forex dealers quoted by PTI.
President Donald Trump on Monday said he would “substantially” increase US tariffs on New Delhi, a fresh trade threat to the country. He accused India of buying large quantities of Russian oil and selling it for huge profits.
The rupee closed 48 paise lower at 87.66 against the US dollar on Monday. The rupee hit a record low of 87.95 on February 10, 2025.
The Indian rupee was under pressure after Trump announced further tariffs on India for continuing to buy Russian oil and is likely to remain under pressure this week as well. According to Anil Kumar Bhasali, Executive Director and Head of Treasury, Finrex Treasury Advisors LLP, Trump’s announcement of imposing 25% tariffs on all Indian exports, even as trade talks are still ongoing, is also leading to pressure from foreign portfolio investors (FPIs).
Trump last week attacked the growing alliance between Russia and India, claiming that the two countries could “destroy their dead economies together.” New Delhi responded by insisting that India’s flagship economy is growing at the fastest pace in the world.
Trump has already imposed a 25% tax on Indian imports and an undisclosed “fine” on India for buying Russian crude oil and military equipment.
Brent oil futures fell 0.28% to $68.57 a barrel after OPEC+ voted on another big increase in production for September, raising concerns of oversupply following disappointing fuel demand data in the US.
The dollar index, which compares the US dollar to six other major currencies, rose 0.04% to 98.81.
Trump, in an executive order titled “Further Revisions in Reciprocal Tariff Rates,” issued on August 1, raised tariffs by a massive twenty-five percent for over fifty countries, including India.
Ahead of the RBI’s monetary policy announcement this week, markets are still cautious. The Monetary Policy Committee (MPC), headed by Sanjay Malhotra, began work on August 4 and will deliver its conclusion tomorrow, August 6. Given the limited scope for inflation, a 25 basis point cut in the repo rate is expected at the MPC meeting.