In early trading on Tuesday, March 4, 2025, the rupee fell 8 paise to 87.40 against the US dollar due to ongoing outflows of foreign funds and a persistent liquidity shortage.
Forex traders claimed that financial markets are in a state of upheaval due to the continuous uncertainty around the application of tariffs by the United States. Furthermore, the U.S. Dollar Index is now more volatile and uncertain as a result of the tariff crisis. The rupee depreciated 8 paise from its previous closing at the interbank foreign exchange, opening at 87.38 and then dropping to 87.40 versus the US dollar.
The rupee closed at 87.32 versus the US dollar on Monday, March 3, up 5 paise. Amid rising trade tensions sparked by US President Donald Trump’s increased tariff policies, the dollar index, which measures the strength of the US dollar against a basket of six currencies, was down 0.12% at 106.61.
In futures trading, Brent crude, the world’s benchmark for oil, was quoted 0.63% down at $71.17 per barrel. The 30-share BSE Sensex was down 175.61 points, or 0.24%, at 72,910.33 in early trading on the domestic equities market, while the Nifty was down 61.55 points, or 0.28%, at 22,057.75.
According to exchange statistics, on Monday, March 3, foreign institutional investors (FIIs) sold stocks in the capital markets for ₹4,788.29 crore on a net basis. “With Nifty falling on a daily basis as FPIs continue to remain sellers, rupee is getting sold off with US dollar amidst demand on account of risk aversion,” said Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP.
On the international scene, President Donald Trump announced Monday, March 3, that import duties from Canada and Mexico would be raised by 25% beginning Tuesday, March 4.
According to Mr. Trump, the purpose of the tariffs is to compel Canada and Mexico to increase their efforts to combat fentanyl trafficking and halt illegal immigration. He wants to push more factories to move to the US and end the trade imbalances in the US. Amit Pabari, MD of CR Forex Advisors, stated that “markets reacted negatively to these developments, with concerns mounting over global trade stability.”
