The Indian rupee tumbled to a historic low on Friday, falling past the 88-per-dollar mark for the first time, as investors cited concerns over the impact of punitive US tariffs on Indian goods.
Washington this week imposed an additional 25 percent tariff on Indian exports, doubling the total duties faced by India to 50 percent. The rupee slid to 88.29 against the US dollar, surpassing its previous all-time low of 87.95 hit in February.
Following the Reserve Bank of India (RBI) intervention in the currency market, the rupee partially rebounded to 88.12 in the afternoon.
The currency has declined roughly three percent so far this year. It also hit a record low against the Chinese yuan on Friday.
Economists warned that the new tariffs could shave off 60-80 basis points from India’s GDP growth if they remain in place for a year, adding pressure to an already slowing economy. India’s central bank currently projects economic growth of 6.5 percent in the financial year ending March 31.
While Indian exports to the US account for 2.2 percent of GDP, sectors such as textiles and jewellery are particularly vulnerable. A sharp slowdown in these labour-intensive industries could lead to job losses and further strain the economy, analysts said.
