New Delhi: With worries growing over the steep tariff on Indian goods, the Indian rupee fell to its lowest ever against the US dollar on Friday afternoon. An additional 25% tariff kicked in from Wednesday, taking the total duties on Indian exports to the US to 50%. As a result, the rupee tumbled to 87.9650 against the dollar, breaking its previous all-time low of 87.95.
The Indian rupee has also dropped nearly 6% against the Chinese yuan over the past four months. On Friday, it fell to 12.3307 against the offshore yuan, extending its weekly decline to 1.2% and the monthly drop to 1.6%. Economists say this trend reflects the different ways US tariffs are affecting India and China, Reuters has reported.
While Indian exports are facing 50% duties, Chinese goods continue to attract only 30%, though US president Donald Trump has spoken of imposing higher tariffs on Beijing.
As India and China compete directly in the US market, especially in sectors like textiles, engineering goods, and chemicals, the yuan-rupee exchange rate plays a key role. A weaker rupee compared to the yuan makes Indian exports cheaper than Chinese ones, softening the impact of higher US tariffs. This could also help reduce India’s large trade deficit with China.
The Reserve Bank of India (RBI), which closely tracks the yuan-rupee rate, has not issued a statement, financial analysts believe that the central bank could welcome this trend since it does not push the rupee beyond its comfort zone against the US dollar. The RBI generally benefits from a weaker rupee, and its fall against the yuan is even more favourable.
