Rupee Rises Marginally Despite US Tariff Escalation; Duties on Indian Goods Now 50%

Mumbai, August 7 – There was a slight appreciation in the Indian Rupee (5 paise) as it reached ₹87.67 against the USD in the early trade on Thursday amid a tightly held range. This was after the Indian currency had managed to rebound from record lows yesterday. At the interbank foreign exchange market, the rupee opened at 87.69 and moved to a high of 87.67, recovering from its previous close of 87.72.

This was despite the tariff escalation by the US President, and the effective total tariff on Indian goods reached 50% which is supposedly levied as a response to India’s continued imports of Russian oil. The additional levy is set to take effect after 21 days, significantly increasing the cost burden on Indian exports to the US, one of India’s largest trading partners.

India has described the new tariffs as “unfair, unjustified and unreasonable.”

The Impact on Investors and Broad Markets

While the rupee held steady due to RBI support, investor sentiment remains cautious amid fears of reduced exports, capital outflows, and potential GDP impact. Equity markets may see short-term volatility, especially in export-heavy stocks. Both Sensex and Nifty opened in the red on Thursday, depicting the tariff impact. Investors may rebalance towards domestic-focused or resilient sectors like IT and pharma as policy uncertainty persists.

India Now Among Most Heavily Taxed by the US

India and Brazil are now subject to the highest import tariffs from the United States, both facing 50 per cent duties. In comparison, China is subject to 30 per cent and Turkey 15 per cent. The move appears to single out India over Russian oil purchases, while other major importers like China and Turkey have not faced equivalent penalties.

Key Export Sectors Under Pressure

The heightened tariffs are likely to impact Indian sectors, including textiles, marine products, and leather goods, all of which have significant exposure to the US market.

RBI Holds Repo Rate; Reserves Decline

Meanwhile, the Reserve Bank of India has kept the repo rate unchanged at 5.50 per cent in its latest policy decision, maintaining a neutral stance amid external uncertainties. India’s foreign exchange reserves dropped by USD 9.3 billion to USD 688.9 billion as of August 1, indicating possible intervention efforts to stabilise the rupee.

Global and Domestic Market Check

Brent crude rose 0.99% to $67.55 per barrel, while the US Dollar Index edged up to 98.21. Indian equities opened lower, with the Sensex down 335.71 points and the Nifty falling 114.15 points amid global trade tensions. FIIs offloaded ₹4,999.10 crore worth of Indian equities on Wednesday. Despite these pressures, the rupee strengthened, supported by domestic economic stability, as markets brace for the upcoming US tariff hike on Indian exports.

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