Rupee falls 36 paise to close at all-time low of 87.43 per USD

Broad strength of the American currency in the overseas market dented investor sentiments

PTI mumbai

The rupee plunged 36 paise to close at an all-time low of 87.43 against the US dollar on Wednesday, as global trade war concerns fuelled risk aversion among investors. Forex traders said the rupee is trading with a negative bias over global trade war as market participants mulled the impact of tariffs being imposed by the United States and China.

Moreover, rate cut concerns by the Reserve Bank of India and broad strength of the American currency in the overseas market dented investor sentiments further. At the interbank foreign exchange, the rupee opened on a weak note at 87.13 and touched an intraday low of 87.49 against the American currency during the session. The local unit finally settled at a record closing low of 87.43, lower by 36 paise over its previous close.

On Tuesday, the rupee recovered 4 paise from its all-time low level to close at 87.07 against US dollar. Anuj Choudhary - Research Analyst at Mirae Asset Sharekhan, said the rupee touched a fresh all-time low on rising odds of a rate cut by the Reserve Bank of India in its monetary policy meeting.

"We expect the rupee to trade with negative bias amid importer demand for dollars and ongoing uncertainty over US trade tariffs. Escalation of the tariff war may dampen global risk sentiments and raise safe haven demand for the US dollar," Choudhary said, adding that traders may take cues from non-farm employment and ISM services PMI data from the US.

Trump is pressing ahead with a 10 per cent tariff on US companies importing things from China. On Tuesday, China retaliated by announcing its own tariffs on some US products and an antitrust investigation into Google. Trump on Monday held off on his tariff threats against Mexico and Canada for 30 days after they pledged to boost border enforcement.