Mumbai, Aug 5 (PTI) The rupee depreciated 29 paise to 87.95 against the US dollar in early trade on Tuesday, a tad above the crucial 88/USD level, after US President Donald Trump's latest salvos targeting India.

Forex traders said the Indian rupee was under pressure and may continue to remain under pressure during this week after Trump said he may announce higher tariffs for India for continuing to buy Russian oil.

In a fresh trade threat against India, President Donald Trump on Monday said he will "substantially" raise US tariffs on New Delhi, accusing it of buying massive amounts of Russian oil and selling it for big profits.

On August 1, Trump signed an Executive Order titled 'Further Modifying The Reciprocal Tariff Rates’, raising tariffs for over five dozen countries, including a steep 25 per cent for India.

At the interbank foreign exchange market, the rupee opened on a weak note a tad above the sensitive 88 per US dollar level at 87.95 against the American currency, registering a decline of 29 paise over its previous close.

On Monday, the rupee depreciated 48 paise to close at 87.66 against the US dollar.

The rupee has touched a record intra-day low of 87.95 on February 10, 2025.

Last week, Trump mounted a sharp attack on India and Russia for their close ties and said the two countries can take their "dead economies down together", a remark which prompted New Delhi to say that India is the world's fastest-growing major economy.

Trump had earlier announced a 25 per cent tariff on imports of Indian goods along with an unspecified "penalty" for buying the "vast majority" of Russian military equipment and crude oil.

Meanwhile, Brent crude prices fell 0.28 per cent to USD 68.57 per barrel in futures trade, after OPEC+ agreed to hike another large output increase in September, adding to oversupply concerns after US data showed lacklustre fuel demand.

The dollar index, which gauges the greenback's strength against a basket of six currencies, rose marginally 0.04 per cent to 98.81.

"The dollar could from here go to a broader downtrend given US policy-making uncertainty and an economy that is finally showing the cracks," Bhansali said.

Meanwhile, investors remain cautious ahead of the RBI monetary policy decision this week.

The RBI Governor Sanjay Malhotra-headed rate-setting panel on Monday started the three-day deliberations to decide the next bi-monthly monetary policy.

The six-member Monetary Policy Committee (MPC) is scheduled to announce the next bi-monthly policy rate on Wednesday (August 6).

In the domestic equity market, Sensex declined 200.40 points or 0.25 per cent to 80,818.32, while Nifty fell 58.90 points or 0.24 per cent to 24,663.80.

Foreign institutional investors (FIIs) offloaded equities worth Rs 2,566.51 crore on a net basis on Monday, according to exchange data. PTI DRR DRR DR

Tariff threat prompts currency pressure, weakening the rupee amid trade tensions and investor concern before policy decisions. Presidentially announced and threatened US tariff increases on India over its purchases of Russian oil led to immediate pressure on the Indian rupee, which opened weaker and depreciated against the US dollar; market participants linked the move to tariff rhetoric, potential capital flow effects, and investor sentiment ahead of the Reserve Bank of India's imminent Monetary Policy Committee decision, while equities declined and foreign institutional investors sold net positions.