Indian Rupee Struggles Under Trump Tariff Pressure, Ahead of RBI MPC Interest Rate Decision

The Indian rupee has plummeted to a lifetime low of 87.49 against the US dollar, making it the worst-performing Asian currency in 2025, influenced by Trump’s tariffs and RBI rate cut expectations.

Rupee Tumbles Due to Trade Tensions

The Indian Rupee has recently become the worst-performing currency in Asia this year, dropping to a record low of 87.49 against the US dollar.

This sharp depreciation is attributed to a combination of factors, including concerns over US President Trump’s tariff policies, persistent foreign investor outflows, and anticipation that the Reserve Bank of India (RBI) may reduce interest rates.

As of February 5, 2025, the rupee experienced a significant fall, closing at ₹87.43, after touching an intraday low of ₹87.49. The depreciation is linked to the ongoing global trade tensions and the impact of tariff measures between the US and China.

Rupee Faces Volatility Amid Rate Cut Expectations

These concerns about the global economy have led to reduced risk appetite among investors, further pressuring the rupee. On top of this, expectations of a rate cut by the RBI’s Monetary Policy Committee (MPC) have added downward pressure.

The rupee has fallen by more than 2% in 2025 and has declined over 20% since 2020, making it one of the weakest currencies in South and Southeast Asia.

As per news reports, traders have been reacting to these factors by positioning themselves for potential interest rate cuts. The rupee’s volatility has been particularly pronounced, and markets predict it could weaken further, with resistance around 87.15.

The RBI’s decision on interest rates is closely awaited, as it may influence the currency’s direction further. Given the global uncertainty and domestic economic pressures, the currency is expected to remain under strain, and market participants are cautious about the impact of further tariffs.

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