Indian rupee closes at record low over Donald Trump's 100% tariff comments, sluggish GDP growth

Indian rupee

Indian rupee closed at record low on December 2 as US President-elect Donald Trump warned BRICS countries with 100 percent tariffs and country’s GDP growth was sluggish, currency experts said.

According to the Bloomberg data, Indian rupee ended at a record low of 84.70 against the US dollar, down 0.21 percent from its previous close of 84.50 against the greenback.

“US President-elect Donald Trump's warned of a potential 100% tariff on BRICS nations if they undermine the US Dollar. Trump's rhetoric is seen as likely strengthening the dollar further. Rupee was also affected by India’s GDP growth slowdown to a near two-year low of 5.4% in the July-September quarter,” said Kunal Sodhani, Vice President, Shinhan Bank.

Donald Trump has warned BRICS countries to commit to not creating new currency or face 100% tariffs during his administration.

The five-member BRICS group, which includes India, Russia, China, Brazil, and South Africa, was called upon to commit to avoiding the creation of an alternative currency.

“We require a commitment from these countries that they will neither create a new BRICS currency nor back any other currency to replace the mighty US dollar. Otherwise, they will face 100 percent tariffs and can expect to say goodbye to selling into the wonderful US economy,” Trump stated.

Further, the local currency has also seen a pressure from the weaker GDP numbers of India. India’s GDP growth slumped to its lowest in seven quarters at 5.4 percent in the September quarter, data released on November 30 shows.

The economy grew at 6.7 percent in the previous quarter and 8.1 percent in the year-ago period.
Indian rupee has been under pressure since last few months due to huge outflows from domestic equities. However, currency experts said sharp fall in rupee has been curbed by the RBI through its intervention in the market.