A new record has been achieved but not a pleasing one. The Indian rupee recently crossed a dismal milestone—above the ₹88-per-US-dollar mark for the very first time ever. On 29 August 2025, it reached an all-time low of ₹88.24, beating its previous all-time low of ₹87.95. And towards the close of trade, it fell further to ₹88.31.
This dip is no isolated market blip. It follows from investors fretting over spillovers of the United States hitting Indian merchandise with a steep 50% tariff.
What's Driving the Fall?
1. Struck by a 50% Tariff Brute
The US last week added an additional 25% tariff, bringing the total tax for Indian exports to a staggering 50%. These hefty levies hit a vast array of products—ranging from gems and jewellery to textiles, leather, footwear, furniture, chemicals, and numerous others.
India’s exporters are suffering. The Gems and Jewellery sector, particularly in Surat, is begging for mercy as the tariffs loom over livelihoods and revenues. Shrimp export, another vital sector, may fall 15–18%, threatening a projected $5 billion trade. Meanwhile, the economic blow will shave as much as 1 percentage point from GDP growth if the tariffs do not relent.
2. Investor Flight and Forex Pressure
In currency terms, the rupee’s decline is not tariff-driven—there’s foreign selling also. Equities saw nearly $950 million of foreign flight, with importers and speculators stepping up dollar demand.
The central bank, Reserve Bank of India (RBI), intervened—but with caution. That caution suggests it may be allowing gradual rupee weakness to maintain export competitiveness.
Exports, Employment, and Trade Balance At Risk
Sectors most reliant on the US are hit the hardest. As many as 55% of India’s $87 billion exports to the US are under threat, putting jobs in textiles, shoes, gems, and others—affecting more so in hubs like Gujarat—at risk.
Exporters estimate China’s tariff impact at as much as $48–55 billion in exports, making them almost worthless in the American market. The Gems & Jewellery sector alone is sounding the warning signals, and shrimp exporters will have estimated billions in losses.
What to Watch and Why It Matters
India’s breaching of the ₹88-per-dollar mark is not just numbers—it’s a symbol of extra economic burden. The feared 50% tariffs startled exporters, rattled investor confidence, and rattled the rupee.
India isn’t swamped, however. But the question is, will the RBI defend the rupee more forcefully? Will the government soften the blow for exporters and pass GST reforms? Will growth slow or rebound?
We’ll keep our eyes on those developments—and while they unfold, understanding this complex dance helps us see how global, monetary, and political issues ripple into our daily economy.
The rupee has recently fallen to an all-time low (~₹88.24–₹88.31), thanks to new steep U.S. tariffs. But India’s economy is still intact so far. Let’s watch it and wish for the best!