MUMBAI: The Indian rupee slipped to an all-time low on Friday, as the threat of US trade tariffs under President Donald Trump weighed on most Asian currencies, while the Reserve Bank of India likely stepped in to support the local unit, traders said.

The rupee dipped to 86.65 per dollar, eclipsing its previous record low of 86.6475 hit earlier in the month.

The dollar index was higher at 108.2 while most Asian currencies declined after Trump said he is planning to impose tariffs on Canada and Mexico on Saturday and is also considering fresh levies on China.

State-run banks were spotted offering dollars, most likely on behalf of the RBI, which helped limit the rupee’s losses, four traders said.

In addition to the risk from Trump’s likely tariff policies, the rupee has also been pressured by persistent foreign portfolio outflows.

Foreign investors have net sold nearly $9 billion of local stocks and bonds in January so far.

In the face of multiple headwinds, including expectations that the RBI will cut rates at its policy meeting next week, the rupee has declined about 1.2% over January and is on track to underperform its regional peers.

In the near term, India’s federal budget announcement on Feb. 1 and developments related to US trade tariffs and their impact on the dollar, is likely to shape the rupee’s trajectory.

Indian rupee ends slightly lower

The rupee is “likely to stay volatile between the range of 86.20-86.80” ahead of key events, Amit Pabari, managing director at FX advisory firm CR Forex said.

Meanwhile, dollar-rupee forward premiums nudged higher ahead of the RBI’s $5 billion 6-month dollar/rupee buy-sell swap auction on Friday. The 6-month forward premium was up slightly at 96.50 paisa.

Bankers expect the swap to see strong interest from lenders and corporate treasuries, with most expecting that the premium cut-off for the auction would be near current levels.