Rupee falls 29 paise to 87.7 against dollar.
On Monday, foreign institutional investors (FIIs) pulled out a significant sum from Indian equities, offloading stocks worth ₹2,566.51 crore on a net basis, according to data from the exchanges. This move signals a cautious stance by global investors amid ongoing market uncertainties and shifting global cues. Such heavy selling can impact market sentiment and reflects how closely FIIs are watching economic developments both in India and abroad. Their decisions often influence broader market trends, and this withdrawal highlights the need for domestic investors to stay vigilant and informed during volatile times.
Rupee Slides to 87.7 Amid Trump’s Tariff Threats, Market Jitters Grow
Sensitive 88/USD mark. The depreciation followed US President Donald Trump’s latest comments, which have rattled financial markets and cast a shadow over India-US trade ties.
Forex traders said the rupee’s weakness is not just a response to broader global trends, but a direct reflection of mounting political and economic tensions sparked by Trump’s remarks and executive actions.
The fresh slide comes after President Trump launched another verbal offensive against India, accusing the country of profiting from discounted Russian crude oil purchases. “India is buying massive amounts of oil from Russia and selling it for big profits,” Trump said during a campaign rally, hinting at “substantially” increasing tariffs on Indian goods.
His comments weren’t just rhetoric. On August 1, Trump signed a new Executive Order titled ‘Further Modifying The Reciprocal Tariff Rates’, which imposes steeper tariffs on over 60 countries. India was among the hardest hit, with a sharp 25 per cent hike in US import duties on Indian goods.
This move — seen as an attempt to pressure India into reducing its energy and defense ties with Russia — has sent ripples across the foreign exchange and equity markets.
Investors on Edge as US-India Tensions Escalate
The timing of the tariff announcement couldn’t be more sensitive. With global investors already cautious due to mixed signals from the US economy and geopolitical uncertainties, Trump’s actions have introduced a fresh element of instability into the Indian market.
“The rupee is likely to remain under pressure for the rest of the week,” said one senior forex dealer. “There’s concern that if tensions escalate further, it could dent foreign investment flows.”
On Monday, they sold off Indian equities worth ₹2,566.51 crore on a net basis, according to data from the exchanges — a move seen as a precautionary response to the unfolding trade narrative and currency volatility.
Brent Crude Softens, but Offers Limited Relief
In global markets, Brent crude oil futures dropped 0.28 per cent to USD 68.57 per barrel after OPEC+ announced another round of output hikes for September. This added to concerns of a potential oversupply at a time when US data shows muted demand for fuel. While this dip in crude prices is typically a relief for oil-importing countries like India, its positive effect on the rupee was muted by broader geopolitical tensions.
Dollar Index Edges Higher, Rupee Weakness Persists
The US dollar also firmed up slightly, with the dollar index — which tracks the greenback against six major global currencies — rising by 0.04 per cent to 98.81. The slight uptick added to the rupee’s woes, although some analysts believe the dollar may soon begin a broader downward trend amid signs of weakness in the US economy.
“The cracks are beginning to show in the US economy,” said forex expert Bhansali. “Uncertainty in US policy-making could eventually weigh on the dollar, but for now, safe-haven flows are keeping it afloat.”
All Eyes on RBI as Monetary Policy Decision Looms
Meanwhile, domestic investors are also bracing for the Reserve Bank of India’s upcoming monetary policy announcement.
The policy decision, scheduled to be announced on Wednesday, comes at a time of growing concern over inflation, currency weakness, and global headwinds. Many investors are hoping the RBI will maintain a balanced stance that supports growth without adding further pressure on the already vulnerable rupee.
Sensex and Nifty Dip Amid Caution
Market sentiment remains fragile, with participants watching not just the RBI’s decision, but also any further developments in the US-India trade standoff.
As India navigates this period of currency stress and political pressure, the rupee’s journey through the week will likely be closely tied to diplomacy, central bank action, and investor nerves. For now, all eyes are on Delhi and Washington — and of course, the RBI headquarters in Mumbai.