Rupee Faces Sharpest Drop in Nearly Three Months

MUMBAI: The Indian rupee experienced its most significant single-day fall in almost three months on Monday, closing at 85.84 against the US dollar, a decrease of 60 paise from Friday's close of 85.24. This downturn was influenced by a selloff in domestic equities and a resurgence in the dollar index, which climbed 0.3% to 102.9, despite falling US bond yields amid anticipations of a Federal Reserve rate cut.

Global Trade Tensions Weigh on Emerging Markets

Following a brief recovery last week, the rupee's weakness resurfaced. "China's decision to impose tariffs on 355 US products has escalated fears of a prolonged trade dispute, adversely affecting global investor sentiment," commented Jateen Trivedi of LKP Securities. "This uncertainty has spurred a risk-off mood, resulting in capital outflows from emerging markets, including India, thereby pressuring the rupee." The Chinese yuan also declined by 0.4% to 7.32, hitting a near four-month low, which contributed to a widespread retreat in Asian currencies, with losses extending up to 1%.