Indian Rupee Faces Record Low Amid US Tariff Concerns Before Budget

31 Jan 2025 , 10:21 AM

As markets await the presentation of the government budget over the weekend, the Indian rupee is predicted to open lower on Friday, perhaps plunging to a lifetime low due to the threat of tariffs from U.S. President Donald Trump.

Compared to 86.6250 in the previous session and flirting with the record low of 86.6475 hit almost two weeks ago, the 1-month non-deliverable future predicted that the rupee will open at 86.64-86.65 to the US dollar.

Trump is contemplating further tariffs on China and intends to put tariffs on Canada and Mexico on Saturday. Trump stated on Thursday that he would make a decision shortly regarding whether to exempt oil imports from Canada and Mexico from the 25% tariffs he has promised to apply.

According to a note from MUFG Bank, the fact that both Canada and Mexico have promised to retaliate against any trade levies would significantly increase the likelihood of tit-for-tat tariffs and hinder global commerce and growth.

The value of Asian currencies declined on Friday. In relation to the US dollar, the offshore Chinese yuan was trading at 7.29.

The federal budget, which will be presented by Finance Minister Nirmala Sitharaman on Saturday, will include policies including income tax cuts to boost economic growth.

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