Indian Rupee Hits Record Low Amid US Tariff Threat, Awaits RBI's Move
The Indian rupee hit an all-time low on Tuesday, closing at 88.80 against the US dollar. This follows a sustained period of foreign capital outflows and global trade uncertainties. Meanwhile, the US has announced a significant tariff hike on branded drugs from October 1, 2023, unless pharmaceutical companies establish manufacturing plants in the US.
On Monday, Indian stock markets witnessed a decline with the Sensex dropping 97.32 points to 80,267.62 and the Nifty slipping 23.80 points to 24,611.10. The rupee's fall was cushioned by a decrease in global crude oil prices and a weaker US dollar. However, it opened at 88.73 on Tuesday and traded in the range of 88.69-88.85 before settling at 88.80, lower by 5 paise.
The US has been imposing tariffs on Indian exports since August 2022, with a 50% tariff currently in place. The US has now announced a 100% tariff on branded or patented drugs entering the US from October 1, 2023, except for companies setting up manufacturing plants in the US. The Reserve Bank of India's Monetary Policy Committee is set to make a decision on Wednesday, with the rupee's range expected to be between 88.50 and 89.00.
The rupee's vulnerability to foreign institutional investors (FPIs) selling due to trade tensions has been evident since August 2022. With the US increasing tariffs and global uncertainties persisting, the Indian currency faces challenges ahead. The upcoming Monetary Policy Committee decision will be closely watched for any measures to stabilize the rupee.
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