Indian rupee hits record low past 88 after US tariff hike; RBI steps in

The Indian rupee spiraled to a new record low on Friday, slipping past the 88 mark against the U.S. dollar for the first time. The slide came after Washington imposed steep new tariffs on Indian goods, sparking concerns about growth and trade.

The rupee briefly touched 88.29 before recovering slightly to 88.12 by afternoon, helped by dollar sales from the Reserve Bank of India (RBI). Even so, the currency has already lost 3% in 2025, making it Asia’s worst performer this year.

The latest pressure came after the U.S. doubled duties on Indian exports to 50%, raising fears of a slowdown in sectors such as textiles and jewellery that employ large numbers of workers. Economists warn the tariffs could shave up to 0.8 percentage points from India’s GDP growth if they remain in place for a year.

India’s economy is currently expected to grow by 6.5% this financial year, but analysts say the new trade headwinds could weigh heavily. “Once the rupee crossed 88, stop losses were triggered and the fall deepened. The next key level to watch is 89,” said Anindya Banerjee, head of foreign exchange research at Kotak Securities.

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The tariffs also risk widening India’s trade deficit at a time when foreign investors are pulling back. Overseas funds have already sold nearly $10 billion worth of Indian equities and debt this year. Analysts say weaker exports combined with sluggish foreign inflows could worsen the country’s balance of payments.

Despite the RBI’s intervention, traders expect the rupee to remain under pressure in the coming weeks as global markets adjust to the new tariff regime.