Donald Trump’s threat to address currency manipulation by countries will lead to more gains for the dollar.

A strong dollar has been the main reason for the slide in the value of the rupee, which has fallen to fresh lows.

Speaking at a session on the dollar at the World Economic Forum Annual Meeting in Davos, former RBI governor Raghuram Rajan — a critic of the Modi government — said the depreciation in the rupee to ₹86-level against the dollar is more because of the strengthening of the American currency rather than any domestic factor.

At the inter-bank forex markets on Tuesday, the rupee ended at 86.58 against the dollar little unchanged from its last close of 86.57 to the greenback.

During the day, it touched a high of 86.28 but reversed the gains as the dollar gained after Trump’s comments on imposing tariffs against neighbouring countries.

A Bloomberg report on Tuesday said a fact sheet from the new US administration that is yet to be made public has called for key federal agencies to examine foreign exchange manipulation by other countries.

While forex circles wondered what steps the new administration will take, they pointed out that going by past statements of Trump confidants, the yuan could be one of the currencies that may come under its radar.

However, addressing or identifying foreign currency manipulation practices is already being done by the US treasury.

It comes out with a bi-annual report which reviews developments in international economic and exchange rate policies.