Trade impasse keeps ₹ in the cold

Rupee recovers 55 paise from all-time low level to close at 90.38 against US dollar

- REUTERS

No currency has been hit harder by US tariffs than India's rupee - and there may yet be more downside as investors pull out of the country until they see a trade deal struck with Washington.

The rupee is among the worst-performing currencies globally this year, sliding 6% against the dollar as a widening trade deficit, punitive 50% US tariffs and investment outflows have dragged it to a record low of 91.075 per dollar.

Measured against a basket of trading-partner currencies, the real effective exchange rate of 96 is the lowest in more than a decade, according to Citi. That is well below a decade average of 103, and a usually reliable signal that it is overdue for a rebound.

But this time is different, according to money managers who have driven pressure on the currency by pulling a record $18 billion from Indian equities this year and say the mood is unlikely to reverse quickly, even though the rupee looks cheap.