In early trade on Tuesday, the Indian rupee fell by 25 paise, reaching an unprecedented intraday low of 88.53 against the US dollar. This decline was largely attributed to rising concerns over increased US tariffs on Indian goods and the introduction of a $100,000 fee for H-1B visas, which has negatively affected investor sentiment.
Forex traders highlighted that global risk aversion and uncertainty surrounding trade policies further intensified the rupee’s slide. At the interbank foreign exchange, the rupee opened at 88.41 but quickly depreciated to 88.53, indicating a 25 paise drop from its previous close of 88.28, following a decline of 12 paise on Monday.
Market participants are closely monitoring the implications of the H-1B visa fee, fearing it could curb remittance growth and potentially hinder service exports to the US. This uncertainty in the market has added further pressure on the rupee. According to Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, the Reserve Bank of India (RBI) has been the primary dollar supplier amid limited inflows, particularly as initial public offerings (IPOs) worth approximately Rs 7,500 crore are set to be launched this week. However, these inflows are reportedly being absorbed by significant demand for dollars.
Bhansali also noted that the RBI’s limited direct intervention in the currency market has led to heightened volatility and potential further declines in the rupee, which is experiencing new lows against various currencies.
In global markets, the dollar index, reflecting the US dollar’s strength against six major currencies, was trading slightly lower at 97.30—a decrease of 0.03%. Meanwhile, Brent crude futures dropped by 0.62% to $66.16 per barrel.
The domestic equity market was also feeling the strain, with the Sensex declining by 207.78 points, or 0.25%, settling at 81,952.19. The Nifty experienced a similar drop, down 68.40 points, or 0.27%, to reach 25,133.95. Foreign Institutional Investors (FIIs) had a notably bearish impact on equities, selling shares worth Rs 2,910.09 crore on the previous trading day.
In a related development, Indian Commerce and Industry Minister Piyush Goyal is heading an official delegation to the United States for trade discussions, aiming to further negotiations on a mutually beneficial trade agreement. The minister, accompanied by special secretary Rajesh Agrawal and other officials, is set to visit New York as part of these proceedings.
