Rupee slides further, opens 28 paise down at 87.71 after Trump slaps 25% tariff, Russia penalty

Indian rupee

The rupee opened 28 paise down on July 31, a day after US President Donald Trump announced a 25 percent tariff on Indian goods and an additional but unspecified penalty for buying Russian oil and arms.

The home currency opened at 87.71 against the US dollar, its fifth straight day of fall and its worst opening in almost five months. The rupee had ended the previous day 87.43.

While announcing the tariff and Russia penalty on July 30, Trump described India as America's "friend" but added it would face 25 percent tariffs plus a penalty for buying Russian military equipment and oil. The US President reiterated that India has among the "highest tariffs in the world".

"Remember, while India is our friend, we have, over the years, done relatively little business with them because their Tariffs are far too high, among the highest in the World, and they have the most strenuous and obnoxious non-monetary Trade Barriers of any Country," Trump said on his Truth Social platform.

Trump hit out at India and China for dealing with Moscow at a time when "everyone wants Russia" to stop the war in Ukraine.

Also read: Indian rupee may open close to 88-mark against US dollar as Trump announces 25% tariffs on India

The new tariff regime is much harsher than the market had anticipated, Abhishek Goenka, Founder and CEO of IFA Global, said. “The market was pricing in a tariff rate lower than 20 percent, which would still have left India relatively competitive within the Asia-Pacific region,” Goenka said. “At one point, India was considered a frontrunner for a favourable trade deal. That expectation has now been completely upended.”

According to Bloomberg data, the rupee has depreciated 0.83 percent in the last two weeks. On a year-to-date basis, the currency is the worst performing among Asian peers. It is down 3.25 percent.

Dilip Parmar, a senior research analyst at HDFC Securities said the rupee is expected to trade within an elevated range of 86.50 to 87.90 over the week.