🎉 Let’s Connect

Empirical F&M Academy

Indian Rupee Hits Record Low Amid U.S. Tariff Pressures

Indian Rupee Hits Record Low Amid U.S. Tariff Pressures
Default
12 Sep, 2025

Indian Rupee Hits Record Low Amid U.S. Tariff Pressures

 

The Indian rupee has plunged to an all-time low of 88.44 against the U.S. dollar, surpassing its previous record of 88.36 set just days earlier. This significant depreciation underscores the mounting strain of U.S. tariffs on Asia's third-largest economy. The U.S. imposed steep tariffs on Indian goods last month, which have dented investor confidence and left the rupee among the most vulnerable among Asian peers. Foreign investors have withdrawn a net of $11.7 billion from Indian debt and equity markets so far this year.


The currency's decline reflects concerns over India's growth and trade outlook, clouding the path for the rupee. To curb the impact, Indian Prime Minister Narendra Modi has rolled out consumption tax cuts. Both countries are also looking at continued negotiations to address the trade barriers.


For now, exporters face uncertainty over order flows, while importers have been forced to hedge more aggressively, distorting the demand-supply balance in the currency market. The Reserve Bank of India has stepped in frequently to temper the pace of the rupee's decline. Market participants say the central bank has been active in the market, selling dollars to smooth volatility and prevent large swings.

 

Impact on Indian Markets


The rupee's record low has significant implications for various sectors:


Exporters: While a weaker rupee can make Indian exports more competitive, the additional burden of U.S. tariffs may offset these benefits.


Importers: Increased costs for imported goods, especially oil and gold, can lead to higher inflation and squeezed profit margins.


Foreign Investors: Continued capital outflows can exert downward pressure on the rupee and affect market liquidity.


Government Policy: The government's fiscal measures, such as tax cuts, aim to support domestic demand and stabilize the economy.


In conclusion, the rupee's decline highlights the challenges posed by global trade dynamics and underscores the need for strategic economic policies to navigate these turbulent times.

 

Latest Course

Latest posts

Our Recent FAQS

Frequently Asked Question &
Answers Here

1. What caused the Indian rupee to hit a record low?

The rupee's depreciation is primarily due to the U.S. imposing steep tariffs on Indian goods, leading to reduced investor confidence and capital outflows from Indian markets.
 

2. How does this affect Indian exporters?

Exporters face uncertainty over order flows as the cost of Indian goods rises in international markets due to the weaker rupee and higher tariffs.

3. What challenges do Indian importers face?

Importers are compelled to hedge more aggressively against currency fluctuations, increasing their operational costs and potentially affecting their profit margins.

4. How is the Reserve Bank of India responding?

The RBI has been actively intervening in the foreign exchange market by selling dollars to stabilize the rupee and prevent excessive volatility.

5. What measures is the Indian government taking?

The Indian government has introduced consumption tax cuts to stimulate domestic demand and mitigate the adverse effects of the tariffs.

6. What is the outlook for the rupee?

The outlook remains fragile, with ongoing trade tensions and investor concerns. The rupee's performance will depend on the resolution of trade issues and overall economic conditions.

Copyright © By Empirical F&M Academy. Design & Developed by Techno Duniya

Enquire Now
Empirical F&M Academy