The rupee ended at 87.3700 against 87.4950 in the previous session. The Indian currency dropped 1% in February, logging its fifth straight monthly loss.
“There was a mild recovery in the rupee, as it was slightly in an oversold zone last week,” a trader with a private bank said.
Hedging demand, persistent equity outflows, and the usual market flows exerted downward pressure on the rupee last week, traders said.
The dollar index was 0.4% down in Asian hours at 107.21, with the major focus remaining on the implementation of tariffs.
U.S. President Donald Trump last week indicated that tariffs on Canada and Mexico will come into effect on Tuesday, with the rate of tariffs on Chinese imports also set to rise on the same day. U.S. Commerce Secretary Howard Lutnick said on Sunday that Trump would decide whether to stick with the 25% level, further creating uncertainty in global markets. These comments were the first indication from Trump’s administration that it may not impose the full threatened level of 25% tariffs.
Trump had previously provided a last-minute reprieve to Canada and Mexico.
However, some traders believe the currency will continue to be on a declining trend over the medium term.
Tariff uncertainties are prompting foreign investors to exit emerging markets, including India, said Sugandha Sachdeva, founder of SS WealthStreet, a New Delhi-based research firm.
“Persistent capital outflows continue to exert downward pressure on the rupee, which seems to be heading towards the 88.20 mark.”
The U.S. ISM manufacturing and services data and the non-farm payrolls data are due later this week, coming amid a backdrop of worries that the world’s largest economy is heading for a slowdown.
