The Indian rupee slipped 19 paise to 85.63 against the US dollar in early trade on Monday (April 7), pressured by global financial volatility triggered by an escalating trade war between the United States and China.

The rupee opened weak at 85.79 and recovered slightly, but remained lower compared to Friday’s close of 85.44, news agency PTI reported.

Market analysts pointed to the impact of foreign fund outflows and heightened investor caution amid a global equity sell-off, despite a weakening dollar and falling crude oil prices which typically support the rupee.

The sharp global market reaction followed the US government's implementation of reciprocal tariffs on over 60 countries and China’s retaliatory move, which included a steep 34% import duty hike.

The worsening trade tensions sent shockwaves through global financial markets. On the domestic front, the 30-share BSE Sensex nosedived 3,014.32 points, or 4%, to 72,350.37, while the broader Nifty plunged 1,016.75 points, or 4.44%, to close at 21,887.70. Foreign institutional investors (FIIs) sold equities worth ₹3,483.98 crore on Friday, reflecting a broad-based risk-off sentiment.

Meanwhile, the dollar index, which measures the greenback against six major currencies, traded marginally lower at 102.71, amid weak services PMI data in the US and concerns over inflation and slowing economic growth due to the tariff war.

Brent crude prices declined 2.73% to $63.79 per barrel in futures trading, weighed down by both the tariff standoff and an OPEC+ decision to ramp up output faster than anticipated.