Rupee Slides to 87.95 Against US Dollar Amid Trump’s Tariff Threats and Russia Ties Criticism

Mumbai, August 5, 2025: The Indian rupee came under renewed pressure on Tuesday, depreciating by 29 paise to open at 87.95 against the US dollar, a level just below the critical 88/USD mark. The decline followed fresh threats from US President Donald Trump targeting India’s trade policies and continued energy imports from Russia.

The falling rupee raises the cost of imports, contributes to rising inflation, compresses corporate profits, and leads to FII outflows and market volatility, ultimately affecting the confidence of the investors that pushes stock indices of all sectors under pressure.

Trump Escalates Trade Pressure on India

Tensions escalated after Trump announced a “substantial” hike in tariffs on Indian goods, accusing New Delhi of reaping profits from discounted Russian oil and aiding Moscow economically. The US president had earlier signed an executive order on August 1 under the title “Further Modifying The Reciprocal Tariff Rates”, imposing a steep 25 percent duty on Indian imports.

This move comes days after Trump criticized India and Russia for their growing strategic and economic partnership, warning that the two nations could “take their dead economies down together.” India’s rebuttal highlighted its position as the world’s fastest-growing major economy.

Rupee Movement and Market Reaction

At the interbank foreign exchange market, the rupee opened weak at 87.95, down 29 paise from Monday’s close of 87.66. This level also matched the rupee’s previous record intra-day low touched on February 10, 2025.

On Monday, the rupee had already dropped 48 paise, highlighting sustained pressure on the currency as geopolitical and trade tensions intensified.

Other Market Indicators

• Brent Crude slipped 0.28% to USD 68.57 per barrel after OPEC+ agreed to ramp up output further in September, raising concerns of oversupply amid sluggish US fuel demand.
• The US Dollar Index edged up slightly by 0.04% to 98.81, reflecting marginal strengthening of the greenback.
• Equity markets also reflected risk aversion, with the BSE Sensex falling 200.40 points to 80,818.32, while the NSE Nifty declined 58.90 points to 24,663.80.
• Foreign Institutional Investors (FIIs) continued to offload holdings, pulling out ₹2,566.51 crore on a net basis on Monday.

Eyes on RBI Policy Decision

Investor sentiment remains cautious ahead of the Reserve Bank of India’s monetary policy decision, with the Monetary Policy Committee (MPC) currently in the midst of a three-day review. The outcome, led by RBI Governor Sanjay Malhotra, is scheduled to be announced on Wednesday, August 6.

As geopolitical risks rise and global monetary dynamics shift, the Indian rupee is expected to remain volatile in the near term, especially amid mounting trade tensions with the United States.

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