Rama Krishna Sangem
Our rupee is now at 88 against the US dollar. Trade analysts predict this will further weaken until the RBI intervenes and stops the slide. But, at the same time, some experts are of the view that the slide is expected to boost Indian exports and make up for the loss due to Trump imposed 50 per cent tariffs on us from August 27.
The rupee on Friday breached the 88-mark for the first-time ever and closed at a record low of 88.19 against the US dollar, tumbling 61 paise amid heightened tensions over India-US trade relations. Forex traders attributed the sharp fall to the imposition of steep US tariffs on Indian exports, sustained foreign fund outflows, and month-end dollar demand. Weakness in domestic equities further showed danger signals.
The US has imposed a 50% tariff on Indian goods entering its market from Aug. 27, a move expected to weigh heavily on labour-intensive sectors like textiles, leather, footwear, and shrimp. “Additional US trade tariffs raise concerns over India’s trade deficit. Weak domestic markets and FII selling may pressurise the rupee further,” said Anuj Chaudhary, research analyst in currency and commodities a
Experts said the RBI could step in to curb volatility if the currency nears 88.50. “The weakness is being driven by the India–US trade war. Hedging demand from importers, steady FPI and corporate outflows, and stop-loss triggers above 87.60 and 88.00 added pressure,” said Anindya Banerjee, head of currency and commodity research at Kotak Securities, said per some media reports.
What about our imports?
Exports lobby may be happy with the slide in rupee value against the US dollar. But, our importers are worried over the slide impact as their bill will be burdensome, not just on them, but also to the ordinary consumers in the country. Service sector may be the gainer, but all other import traders will be paying 10-20 per cent more on every good that is imported into the country. They are desperately hoping for an early intervention by the RBI to check rupee sldie.
