Wed Feb 05 10:52:39 UTC 2025: ## Rupee Plunges to All-Time Low Amidst Global Trade War Fears and Rate Cut Concerns

**Mumbai, February 5, 2025** – The Indian rupee plummeted to a record low of 87.46 against the US dollar on Wednesday, driven by escalating global trade tensions and concerns over a potential interest rate cut by the Reserve Bank of India (RBI). The currency closed 39 paise lower than its previous close, reflecting a negative market sentiment.

The decline follows US President Trump’s continued imposition of tariffs on Chinese goods, with China retaliating with its own tariffs and an antitrust investigation into Google. This renewed trade war fueled risk aversion among investors, further weakening the rupee. Adding to the pressure, the strength of the US dollar in international markets and anticipation of an RBI rate cut – the first in five years – also contributed to the rupee’s fall.

While the RBI’s Monetary Policy Committee (MPC) began a three-day meeting on Wednesday to discuss interest rates, with a decision expected on February 7th, market expectations of a 25 basis-points cut are weighing on the currency. The last rate cut by the RBI was in May 2020.

The negative sentiment also impacted the domestic equity market. The BSE Sensex closed down 0.40%, and the Nifty fell 0.18%. Despite foreign institutional investors (FIIs) purchasing equities worth ₹809.23 crore on Tuesday, the overall market mood remains cautious.

Adding to the economic concerns, a survey revealed that India’s services sector activity slowed to its lowest pace in over two years in January, indicating weakening sales and output. The HSBC India Services PMI Business Activity Index fell to 56.5 from 59.3 in December. The Brent crude price also fell 0.51% to $75.81 per barrel.

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