US tariffs, FPI exits add to rupee stress

A one-two punch from hefty Trump tariffs and a sustained exodus of foreign capital threatens to push the Indian rupee to a new record low, potentially providing relief for struggling exporters but also making imported goods more expensive.

- Shayan Ghosh & Ram Sahgal

Experts anticipate the currency could slide past 88 to the dollar, while the Reserve Bank of India (RBI) limits its intervention to curbing excessive volatility rather than defending any specific currency level.

The rupee gained five paise against the dollar to close at 87.63 on Thursday, with market participants pointing to likely RBI intervention through some large banks.

"The fact is, that there is going to be an immediate-term impact on the economy, and therefore, on the currency," said Dipti Deodhar Chitale, chief executive at treasury risk consulting and forex risk advisory company Mecklai Financial Services.

According to Chitale, the RBI will keep intervening to absorb flows and curb excessive volatility; and the rupee will remain under pressure and possibly touch 88.2 to a dollar, potentially as early as a fortnight.

"I understand that the RBI was believed to be present in the currency market today through some large banks, at around 87.69 level," said Chitale.