Rupee Slides to Fresh Record of 88.27 Against Dollar Despite GST Boost

The Indian rupee weakened further on Friday, closing at a new all-time low of 88.27 per U.S. dollar, down 12 paise from Thursday’s level of 88.15. The fall was driven mainly by persistent selling from foreign investors and renewed worries over global trade tensions, which overshadowed recent domestic policy reforms.

GST Overhaul Fails to Offer Immediate Relief

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

Earlier this week, the government announced a major overhaul of the Goods and Services Tax (GST) framework in an effort to simplify the system and stimulate demand. The revised structure reduces the four existing slabs to two rates—5% and 18%— along with a 40% levy on luxury and sin goods.

While the move is expected to make household consumption cheaper and support long-term growth, it failed to arrest the rupee’s slide. Analysts said global factors continued to dominate market sentiment, keeping the currency under pressure.

Foreign Outflows and Global Headwinds

“Despite significant fiscal measures, the rupee is struggling near record lows. Investors are reacting more to overseas developments such as higher U.S. tariffs and heavy foreign equity outflows,” noted Jigar Trivedi, Senior Research Analyst at Reliance Securities.

Foreign Institutional Investors (FIIs) have been pulling funds from Indian markets in recent weeks, intensifying the rupee’s weakness. On the global front, renewed tariff threats from the U.S. administration on semiconductor imports further unsettled trade relations, adding to volatility in emerging-market currencies.

Global Cues Shape Sentiment

Equity markets worldwide ended the week on a cautious note as weak U.S. labour market data increased expectations that the Federal Reserve could move towards rate cuts soon. This uncertainty weighed on risk appetite and kept safe-haven demand for the dollar strong.

“Market sentiment remains fragile,” said Ritesh Bhansali, Deputy CEO at Mecklai Financial Services. “Fresh tariff threats by President Trump have clouded trade prospects, and that has only heightened the rupee’s vulnerability.”

Conclusion

The rupee’s latest decline underlines India’s exposure to global capital flows and trade uncertainties. Although structural reforms such as GST rationalisation are aimed at boosting domestic demand, they have so far done little to cushion the currency against external shocks. Market participants expect continued volatility in the near term until clarity emerges on global trade and monetary policy.