Rupee, markets tumble as Trump tariffs bite

Bengaluru: The rupee, on Monday, hit a fresh lifetime low while Indian equity markets also fell tracking concerns across global markets after United States President Donald Trump’s plans to impose 25 per cent tariffs on steel and aluminum imports, and reciprocal tariffs by other countries, including China.

The US is the biggest market for India’s aluminium exports, but steel exports from India to the world’s largest economy are negligible.

The imposition of additional tariff on steel will not have much impact on the Indian industry as the domestic market is strong. Steel Secretary Sandeep Poundrik said on Monday. India’s aluminum industry is likely to be impacted, however.

On Monday, the Indian rupee plunged 45 paise and fell as much as 87.95 against the US dollar, weighed down by the strength of the American currency and tariff concerns, but settled on a flat note at 87.50 on suspected intervention in the FX markets by the Reserve Bank of India.

“Given Donald Trump’s policies, dollar appreciation has been a consensus trade in the last 3-4 months. However, on a relative basis, the rupee has been one of the least depreciating currencies against the greenback,” Pawan Parakh, Fund Manager, Geojit Financial Services.

Parekh said that the view among economists is that the rupee is overvalued on a real-effective exchange rate basis and thus may depreciate further.

“With ongoing capital outflows, global trade tensions, and a strong dollar, rupee volatility is expected to persist in the 87.25 - 88.00 range,” said Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities.

Meanwhile, benchmark indices BSE Sensex and NSE Nifty closed with losses for the fourth consecutive day. The 30-share Sensex dropped 548.39 points or 0.70 per cent to settle at 77,311.80. During the day it nearly fell 1 per cent. The 50-share Nifty declined 178.35 points or 0.76 per cent to 23,381.60, dragged by losses in Trent, Tata Steel and Power Grid.

The wealth of Sensex investors has eroded by Rs 7.68 lakh crore in the past four trading days.

“The US tariff threats continued to impact the market sentiment. Domestic yield is inching higher as investors stay cautious on riskier assets and navigate their investments to safe haven assets like gold,” said Vinod Nair, Head of Research, Geojit Financial Services.

From the Sensex pack, Power Grid, Tata Steel, Zomato, Titan, Bajaj Finance, Mahindra & Mahindra, NTPC and Tata Motors were among the major laggards.

The BSE small cap gauge dropped 2.25 per cent and midcap index tanked 2.06 per cent. All BSE sectoral indices ended lower.

NEW DELHI: BSE SENSEX.

NEW DELHI: RUPEE VS DOLLAR.