Indian currency experiences a six-month-long losing streak due to concerns over US tariff issues
The recent increase in U.S. tariffs on Indian goods has contributed to pressure on the Indian rupee, causing some depreciation against the U.S. dollar in recent weeks.
On August 6, 2025, the Trump administration raised the tariff rate on Indian imports from 25% to 50%, the highest U.S. tariff rate in decades. India faces a variety of 25% to 50% reciprocal and secondary tariffs from the U.S., effective late July to August 2025.
Such tariffs generally weaken the Indian rupee relative to the dollar by reducing demand for Indian exports and increasing uncertainty in trade relations. The tariffs have also increased consumer prices and economic pressures in both countries, indirectly impacting exchange rates via changes in trade balances and monetary policy reactions.
Although exact numerical exchange rate movements require forex market data from August 2025, the elevated U.S. tariffs on India are correlated with a short-term depreciation of the Indian rupee against the U.S. dollar due to trade frictions and investor caution.
Rising pressure on the rupee was driven by India's position among the hardest-hit countries in Trump's trade offensive. However, some remain hopeful that a resolution to the U.S.-India trade dispute may be reached in the coming period.
Nishit Master, portfolio manager at Axis Securities PMS, stated that there is a high probability that the U.S. may lower tariffs in the coming weeks or months. He also suggested that if the U.S. lowers tariffs, it could lead to a relief rally in Indian markets.
The Reserve Bank of India (RBI) has intervened almost daily to prevent a deeper slide in the rupee. Despite the intervention, the Indian rupee ended lower for a fifth consecutive week. The currency opened at 87.5600 and reached an intraday high of 87.5350, but closed marginally higher at 87.6550 against the U.S. dollar.
The rupee has depreciated nearly 3% over the past five weeks. However, it's important to note that the potential relief rally in Indian markets, as suggested by Nishit Master, is not related to any changes in the position of India among the hardest-hit countries in Trump's trade offensive.
Market participants expect another decline in foreign exchange reserves, reflecting the ongoing pressure on the rupee. Despite the challenges, the hope for a resolution to the trade dispute and potential tariff reduction continues to offer some optimism for the Indian markets.
- The heightened U.S. tariffs on Indian imports, especially the 50% rate, have posed a significant challenge in the business sector, as it intensifies personal-finance issues for both countries.
- The finance industry has been keeping a close eye on the U.S.-India trade dispute, as rising tariffs could potentially sway general-news headlines and influence investing decisions.
- The increased tariffs and subsequent depreciation of the Indian rupee have also brought about concerns in the realm of crime and justice, due to the possible cascading effect on domestic businesses and consumers.
- Meanwhile, the dynamics of the tariff wars between the U.S. and India have become a hot topic in politics, with diplomatic efforts aimed at easing the tensions and reaching a favorable agreement for both economies.
