The Indian rupee hit an all-time low on Wednesday, during afternoon trade amid a slump in Asian equities. The rupee dropped to 87.35 against the US dollar, surpassing its previous record low of 87.28 set on Monday, and was down nearly 0.3 per cent for the day.
Asian equities pared their gains after Chinese stocks opened lower, as investor caution grew amid escalating trade tensions between the world’s two largest economies China and the US. Dollar demand from importers put additional pressure on the rupee, although intermittent dollar sales by state-run banks helped limit further losses, according to traders, as per the Economic Times report.
Hong Kong equities declined, and a broader Asian share index reversed some of its earlier gains as China’s market reopened on Wednesday following the Lunar New Year holidays. US equity futures dipped as Alphabet Inc., the parent company of Google, and Advanced Micro Devices Inc. saw losses in after-hours trading. Treasury yields ticked up, and the yen strengthened against the dollar.
While a weaker dollar supported most Asian currencies on Wednesday, the rupee underperformed as traders anticipated the Reserve Bank of India’s first rate cut in nearly five years. The dollar index fell by 0.3 per cent, settling at 107.7.
Additionally, traders are also awaiting the Reserve Bank of India’s MPC announcement this week. In addition to the rate cut expectations, the rupee has been under continued pressure due to persistent foreign portfolio outflows. Overseas investors have net sold $8 billion worth of Indian stocks and bonds so far in 2025.
Meanwhile, on Monday, US President Donald Trump agreed to a 30-day pause on his tariff threats against Mexico and Canada, in exchange for concessions on border and crime enforcement with the two neighbouring countries. Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau both confirmed their agreement to strengthen border enforcement efforts, addressing Trump’s demands to combat immigration and drug smuggling.
