The Indian rupee plunged to a new all time low on Tuesday, surpassing the previous record set only days earlier. Continued trade disputes between India and
the United States have driven strong demand for the US dollar, putting pressure on the rupee. The currency fell to 88.80 against the dollar, edging below last week’s low of 88.7975. On Monday, US President Donald Trump announced 100 per cent tariff on movies made outside of the United states. In a social media post on Truth Social Trump wrote, "Our movie making business has been stolen from the United States of America, by other Countries, just like stealing “candy from a baby.” California, with its weak and incompetent Governor, has been particularly hard hit. Therefore, in order to solve this long time, never ending problem, I will be imposing a 100 per cent Tariff on any and all movies that are made outside of the United States. Thank you for your attention to this matter." Market Sentiment And RBI Policy Expectations Foreign portfolio investors (FPIs) continue to be net sellers, weighing on equity markets and adding pressure on the rupee. The ongoing uncertainty surrounding the Indo-US trade agreement has also contributed to cautious investor sentiment ahead of the Monetary Policy Committee’s (MPC) key interest rate decision scheduled between September 29 and October 1. According to a Business Standard poll, the MPC is widely expected to maintain the repo rate at its current level, following the last hold in August after a 50-basis-point cut in June. Factors Influencing Currency Movement Persistent strong demand for the US dollar continues to limit significant gains. Meanwhile, government bond yields rose to 6.55 per cent on Monday, reflecting increased borrowing plans by the Indian government for the October-March period. On the global front, the dollar index held steady near 98, with traders concerned about a possible US government shutdown beginning October 1. Crude oil prices also declined following a diplomatic agreement between US President Donald Trump and Israeli Prime Minister Benjamin Netanyahu aimed at ending the Gaza conflict, with Brent crude falling 0.79 per cent to $67.43 per barrel.
