Mumbai, August 7, 2025 — The Indian rupee appreciated marginally by 5 paise to open at 87.67 against the U.S. dollar in early trade on Thursday, defying broader concerns after U.S. President Donald Trump doubled tariffs on Indian goods to 50% over India’s continued imports of Russian oil.
At the interbank foreign exchange market, the domestic currency opened at 87.69 and rose to an intraday high of 87.67, compared to its previous close of 87.72. This follows a rebound on Wednesday when the rupee recovered from a record low.
India Hit with Harshest U.S. Tariffs
Trump’s decision to slap an additional 25% duty — raising total tariffs on certain Indian exports to 50% — has drawn sharp criticism from New Delhi. India described the action as “unfair, unjustified and unreasonable.”
Sectors such as textiles, marine products, and leather goods are expected to be the hardest hit, as they now face the highest tariff burden globally — on par with Brazil. Other countries such as China and Turkey were spared the same level of penalties, facing only 30% and 15% duties, respectively.
The punitive action, set to take effect within 21 days, is being interpreted as a direct response to India’s refusal to halt its oil trade with Russia.
Economic Fallout Looms
Economists are warning of a broader economic impact. According to Amit Pabari, MD of CR Forex Advisors, “If no resolution is reached within the 21-day window, India’s FY26 GDP growth could be revised down to below 6%, factoring in a 40–50 basis point hit — twice the earlier estimate.”
Pabari also flagged the rupee’s vulnerability amid mounting external pressures, adding that continued uncertainty could trigger further depreciation.
RBI Holds Rates Amid Caution
In its latest monetary policy review, the Reserve Bank of India (RBI) kept the repo rate unchanged at 5.50% and maintained a neutral stance. Analysts interpret the move as a signal that the central bank is opting for a cautious, “wait-and-watch” approach amid rising trade tensions and a slowing global economy.
India’s forex reserves dropped by $9.3 billion to $688.9 billion as of August 1, reflecting the RBI’s active intervention in currency markets.
Markets React; Oil, Dollar Edge Higher
Brent crude futures rose 0.99% to $67.55 per barrel, adding further pressure on India’s import bill. Meanwhile, the U.S. dollar index edged up by 0.04% to 98.21, suggesting sustained greenback strength.
Domestic equities opened in the red, with the Sensex falling 335.71 points to 80,208.28 and the Nifty dropping 114.15 points to 24,460.05 in early trade. Foreign Institutional Investors (FIIs) net sold Indian equities worth ₹4,999.10 crore on Wednesday, continuing their recent exit trend.
