Indian rupee tumbles as US threatens sanctions over Russia war support
Photo: Indian rupee crashes over sanctions linked to helping Putin kill Ukrainians (Getty Images)
The Indian rupee may drop below the 88-per-dollar mark today, hitting an all-time low. The sharp decline follows new threats from US President Donald Trump to raise tariffs on Indian goods, according to Reuters.
The previous record low—87.95—was recorded in February.
Pressure over Russian oil
Trump has once again accused India of buying and reselling Russian oil, warning of a significant increase in tariffs on Indian products. India's Ministry of External Affairs responded that the country "will take all necessary steps to protect its national interests and economic security."
"Whether this barrage of comments is mainly negotiating tactics against India to partly prod for changes in the Russia-Ukraine war remains to be seen," analysts at MUFG Bank noted.
Trade talks stall, capital flees
Last week, Trump imposed 25% tariffs on Indian imports, higher than expected. Trade negotiations between the two countries have also stalled.
Amid deteriorating sentiment, the rupee weakened even as the US dollar softened globally. On Monday, the Indian currency failed to hold its intraday gain to 87.20 and resumed its downward slide.
Central bank may step in
"Today was already shaping up to be a difficult session (for the rupee), and Trump’s latest tariff threat only amplified the pressure," said a senior trader at a private bank.
He added that the Reserve Bank of India would likely intervene to prevent an uncontrolled depreciation amid escalating tensions with the US. There's also growing concern about an accelerated outflow of foreign investment from India’s stock market.
Deputy Chief of Staff to the US President Stephen Miller previously accused India of funding Russia's war on Ukraine through purchases of Russian oil, calling it an "astonishing fact."
President Trump has vowed to raise tariffs on India in response. "They don’t care how many people in Ukraine are being killed by the Russian war machine. Because of this, I will be substantially raising the tariff paid by India to the USA," the US President said.
