The Indian rupee emerged as the second worst-performing currency in Asia on Friday, dragged down by rising global uncertainty following the imposition of reciprocal tariffs by US President Donald Trump earlier this month.
According to Bloomberg data, the rupee declined 0.73 per cent between 1 April and 11 April, second only to the Indonesian rupiah, which fell 1.40 per cent during the same period.
The pressure on the rupee persisted despite a sharp drop in the dollar index, as foreign investor flows remained subdued and Indian equity markets continued to fall, limiting any upside for the currency, analysts said.
Trump’s announcement on 2 April included reciprocal tariffs on multiple countries: 34 per cent on imports from China, 20 per cent on the EU, 25 per cent on South Korea, 26 per cent on India, 24 per cent on Japan and 32 per cent on Taiwan. He claimed India imposed 52 per cent tariffs on American imports, factoring in what he termed as “currency manipulation and trade barriers”.
Stock markets worldwide reacted negatively to the announcement, triggering foreign capital outflows from India and intensifying pressure on the rupee. However, the falling dollar index, which dropped to 99.460 as its lowest level since July 2023—helped cushion the blow for the Indian currency.
The rupee still performed better than several other major currencies over the same period. The South African rand fell 4.31 per cent, the Brazilian real 3.45 per cent, the Norwegian krone 1.60 per cent, the Australian dollar 0.92 per cent and the Mexican peso 0.85 per cent.
On Thursday, Trump announced a 90-day pause on the reciprocal tariffs for all countries except China. The US retained a baseline levy of 10 per cent on others, while China’s tariff rate was hiked to 125 per cent.
The partial rollback follows backlash from Republican law makers and business leaders after heavy sell-offs in the US stock and bond markets. US Treasury Secretary Scott Bessent and senior White House officials reportedly warned Trump of the growing risks of a market collapse and potential global recession.
Commenting on the situation, Trump said, “People are getting a little bit afraid… They were getting yippy.”
