Indian Rupee Hits Record Low of 88.44 Against U.S. Dollar Amid Tariff Shock

The Indian rupee slid to an all-time low on Thursday, reflecting mounting pressure from recently imposed U.S. tariffs and large foreign fund withdrawals. The currency closed weaker as exporters and importers adjusted to heightened uncertainty in trade and capital flows.

Record Fall in the Rupee

The rupee closed 0.39% lower at 88.4425 against the U.S. dollar, down from the previous close of 88.1000. The move breached last Friday’s record low of 88.36 and marked a fresh intraday and closing trough for the currency.

Tariffs, Capital Outflows and Market Sentiment

Punitive U.S. tariffs on Indian goods, which came into force last month, have dented investor confidence and weighed on the currency. Foreign investors have withdrawn a net of $11.7 billion from India’s debt and equity markets so far this year, a trend that has amplified pressure on the rupee. The tariffs have clouded India’s growth and trade outlook, prompting firms and traders to reassess order flows and hedging strategies.

Impact on Exporters and Importers

Exporters now face uncertainty over future orders, while importers are hedging forex exposure more aggressively. That shift has distorted the usual demand–supply balance in the currency market, increasing volatility and driving larger intraday swings in the rupee.

Government Measures and Trade Talks

To mitigate the economic impact of the levies, the central government has introduced consumption tax cuts. Officials in both India and the United States have indicated a willingness to resume negotiations to resolve trade barriers, though no substantive breakthrough had been reported as of Thursday.

RBI Intervention and Market Operations

Market participants said the Reserve Bank of India (RBI) has been intervening frequently to temper the rupee’s decline, selling dollars to prevent large swings. Such intervention has been aimed at stabilising the currency rather than defending a fixed level, according to traders.

Regional Contrast and Global Context

The rupee’s weakness stood in contrast to several regional peers, many of which benefited from speculation about an imminent Federal Reserve rate cut. On Thursday, most Asian currencies fell, while the dollar index inched higher as markets awaited fresh U.S. inflation data that could influence global rate expectations.

Conclusion

The rupee’s slide to 88.4425 underlines the immediate strain from trade frictions and capital outflows. Its near-term path will hinge on progress in U.S.–India discussions, the scale of further foreign withdrawals, upcoming U.S. macro data, and the extent of RBI intervention to steady markets.

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