The Indian rupee weakened against the U.S. dollar in the European session on Wednesday, after the Reserve Bank of India reduced its key policy rates for the second straight meeting and also changed its monetary policy stance to accommodative.

At the first policy meeting of the financial year, the committee governed by Sanjay Malhotra unanimously decided to cut the policy repo rate by 25 basis points to 6.00 percent, with immediate effect.

The bank had previously cut its policy rate by 25 basis points in February, which was the first reduction since May 2020.

The RBI downgraded India's economic growth outlook for FY25-26 to 6.5 percent from 6.7 percent. Likewise, inflation projection for the current financial year was lowered to 4.0 percent from 4.2 percent.

Also, the investor sentiment dropped as China and the United States moved towards an all-out trade war.

The White House announced that a sweeping 104 percent tariff imports from China has gone into effect, deepening the economic standoff between Washington and Beijing.

U.S. President Donald Trump's "reciprocal tariffs" on all other countries are also set to take effect today.

Against the U.S. dollar, the rupee fell to a 3-week low of 86.662 from an early high of 86.311. At yesterday's close, the rupee was trading at 86.240 against the greenback.

If the rupee extends its downtrend, it is likely to find support around the 87.00 region.

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