Rupee Slides to ₹87.71 Against Dollar as Trump Tariff Shock Rattles Markets

The Indian rupee weakened significantly on Thursday, opening at ₹87.71 against the U.S. dollar on the back of President Donald Trump’s announcement of a 25% tariff on Indian goods, plus an unspecified penalty linked to purchases of Russian oil and arms. This marked the currency’s fifth consecutive day of decline and its weakest opening level in nearly five months. 

Analysts trace the rupee’s slide to heightened trade policy uncertainty and sustained foreign outflows. In July alone, overseas investors sold around $2 billion in Indian equities and bonds. As of today, the rupee has depreciated roughly 2% in 2025, making it one of Asia’s worst‑performing currencies. 

According to Bloomberg, forward contracts, the one‑month non‑deliverable forward (NDF) indicates the rupee will open in the ₹87.66–₹87.69 range, compared to ₹87.42 in the previous session. Traders expect the Reserve Bank of India (RBI) to step in via limited market intervention to curb extreme volatility—but firm action to restore strength appears less likely. 

Shares in major Indian equity indices also fell—Sensex and Nifty increased by about 0.34% & 0.22% respectively amid intensifying trade tensions. 

High‑profile analysts voiced concern. Abhishek Goenka of IFA Global noted markets had priced in a tariff below 20%, and the steep 25% levy overshoots expectations, undermining India’s advantage among Asia‑Pacific competitors. 

Economists warn the tariffs could shave off 30 to 40 basis points from India’s GDP growth in 2025‑26, especially impacting labour‑intensive manufacturing exports. However, with exports to the U.S. accounting for just 1% of GDP, the broader macro impact may be moderate, although investment delays and uncertainty could weigh on recovery. 

Market observers remain cautious but note that India’s growth resilience—especially through trade diversification and domestic demand—could provide a buffer. Analysts suggest that fiscal support, export adaptation and possible trade negotiations may help manage risks ahead. 

Conclusion

The rupee’s depreciation to ₹87.71 per dollar reflects growing market anxiety following Trump’s tariff announcement and geopolitical penalties. With ongoing foreign capital outflows and trade caution mounting, the currency is under pressure. Stabilisation efforts by the RBI and progress in bilateral negotiations will be vital to prevent further weakening and restore confidence.