The Indian rupee recorded a low number of 87.965 against the US dollar, amid the pressure of the American tariff

The Indian rupee reached the lowest new level against the US dollar on Friday, as it decreased to 87,9650, amid fears of investors about the sharp tariffs imposed by the United States on Indian goods. Washington’s decision to introduce an additional tariff by 25 %, which doubles duties on Indian exports to 50 %, and sent shock waves in the market, which contributed to the cycle of landing in the rupee.

However, currency problems do not end with dollars. Against the Chinese yuan abroad, the rupee decreased further, reaching 12,3307, which represents a 1.2 % decrease for the week and 1.6 % for this month. Over the past four months, the rupee has decreased about 6 % against the yuan, which raised concerns about the broader effects of trade dynamics in India.

Economists have pointed out the varying treatment of Indian and Chinese goods under the new American tariff structure. While Indian exports face a 50 % harsh duty, Chinese goods are only 30 % tariff, with no higher duties. “The decline in the yuan reflects the customs tariff gap, which directly affects the sectors competing with China in the American markets such as textiles, engineering goods and chemicals,” Goura Sen Gobta, economist at IDFC First Bank, told Reuters.

Interestingly, the weakest rupee against Yuan can provide some comfort for Indian exporters. The consuming rupee can make Indian goods relatively cheaper compared to Chinese products, which may give Indian exports a competitive advantage in global markets. Moreover, weaker rupees can help narrow the increasing trade deficit in India with China.

The Indian Reserve Bank (RBI) is closely monitoring the Yuan Ruby exchange rate, which has become an increasingly important factor in India’s economic strategy. FX Dhiraj NIM, from ANZ, indicated that RBI may welcome a decrease in rupee against the yuan, because it does not represent a significant decline against the US dollar. He said: “The Australian Reserve Bank must welcomes the weakest rupees in itself as it relates to the yuan, and it is better than that.”

While the rupee has weakened more than 1 % against the yuan this week, it only decreased by 0.3 % against the dollar, while maintaining a level higher than $ 88 per dollar. Bankers suggest that RBI interventions played a decisive role in reducing the extent of consumption.

The weak rupee adds another layer of complexity to the economic situation of India, which is already struggling with the repercussions of the Trump administration tariff. Chris Wood, the global head of the stock strategy in Jeffrez, stated that the customs tariff may cost India between 55 to 60 billion dollars, as the sectors strike the dense labor, such as textiles, shoes, jewelry and precious stones.