USD/INR: Indian Rupee Slips to Record Low on January 31, 2025, US Tariff Concerns Weigh

The Indian rupee falls to an all-time low of 86.65 per dollar due to fears over US tariffs. As per news reports, while the RBI intervenes, concerns over foreign outflows and the upcoming federal budget add pressure.

Asian Currencies Decline

The dollar’s strengthening further pressured Asian currencies, including the rupee. Trump’s statements on imposing tariffs on Canada, Mexico, and potentially China have raised concerns, pushing the rupee to surpass its previous low of 86.6475 earlier in the month.

As per news reports, state-owned banks were seen offering dollars, likely on behalf of the Reserve Bank of India (RBI), helping to curb the rupee’s decline.

Along with tariff concerns, the rupee has been weighed down by persistent foreign portfolio outflows, with nearly $9 billion sold by foreign investors in January. The rupee has depreciated about 1.2% in January, underperforming its regional peers.

Budget and Global Trade Developments Driving Volatility

The Indian rupee’s short-term movement will be influenced by key upcoming events, including India’s Union budget and any developments related to US trade tariffs.

Additionally, the dollar-rupee forward premiums edged higher in anticipation of the RBI’s $5 billion dollar/rupee buy-sell swap auction. Bankers expect strong interest from corporate treasuries, with most forecasting that the premium cut-off for the auction will be near current levels.

Overall, the rupee’s outlook depends heavily on both domestic factors like the federal budget and external factors such as global trade developments.

Crude Prices Show Mixed Trends

Brent crude futures for March, which expire on Friday, rose by 61 cents to $77.48 a barrel, while the more active April contract increased by 48 cents to $76.37 a barrel. US West Texas Intermediate (WTI) crude also saw a 65-cent gain, reaching $73.38.

For the week, Brent is on track to decline by 1.3%, and WTI has dropped by 1.69%. However, in January, Brent is expected to rise by 3.8%, marking its strongest month since June, while WTI is set to increase by 2.3%.

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