The rupee saw its steepest single-day decline in around 26 months amid global trade war tensions, erasing all its gains of 2025.
Fears over global trade tensions escalated after China implemented retaliatory tariffs on US goods.
On Monday, April 7, 2025, the local currency depreciated by 0.6 per cent -- the worst fall since February 6, 2023 -- to settle at 85.84 per dollar, against the previous close of 85.24.
The rupee was one of the worst performing Asian currencies on Monday. The Philippines peso depreciated the most with 1.1 per cent fall during the day.
Till the time tariffs talks are there, the market is expected to remain volatile. The RBI was there in the initial hours of trading. We saw some selling from foreign banks as well. However, key levels were protected, with the RBI protecting it (rupee) around 85 levels, said a dealer at a private bank.
The domestic currency erased all its gains for the year, registering a 0.2 per cent fall during the current calendar year so far.
On Friday, the rupee had surged past the 85 per dollar mark, reaching 84.95 intraday. The rupee ended the day with a gain of 0.44 per cent.
In March, the rupee had regained strength against the dollar, buoyed by inflows after hitting new lows earlier in the year. It had recovered from nearly 88 per dollar to recoup all losses for the calendar year.
Foreign exchange market participants said the rupee is expected to be volatile for a few sessions. However, it is seen stabilising around 85.50 per dollar mark in the medium term.
Anjali Kumari, Business Standard