Rupee Plummets Against Dollar Amid Trump Tariffs, Investor Anxiety

New Delhi (The Uttam Hindu): The direct impact of the 50% tariff imposed by the US on India is being seen on the Indian currency. On Thursday, the rupee fell to 88.44 against the dollar, which is even lower than last Friday's record level of 88.36. This fall clearly shows how much pressure the US trade policy is putting on Asia's third largest economy, India.

Foreign investors have withdrawn billions of dollars

The main reason for the weakness of the rupee is the wavering confidence of investors. According to data, so far this year, foreign investors have withdrawn 11.7 billion dollars from the Indian stock and bond markets. The rupee is under the most pressure among Asian currencies. Tariffs have had a negative impact on India's economic growth and trade, which has increased instability in the currency market.

The central government has announced a reduction in GST rates to reduce the impact. Apart from this, India and America are trying to remove trade barriers through mutual talks. But exporters are uncertain about getting new orders, while importers have to do more hedging. This is disturbing the balance of demand and supply in the currency market. Hedging is a kind of risk management strategy, which companies resort to to avoid fluctuations. The Reserve Bank of India (RBI) is constantly intervening in the market so that the pace of rupee's fall is controlled. According to sources, the central bank is trying to stop the fluctuations by selling dollars. However, RBI is not adopting a strategy to stop the rupee at any particular level, but wants to keep the decline balanced.