The Indian rupee fell to a new record low against the US dollar, closing at 88.09 on Friday. This marked a significant drop of 51 paise, fuelled by rising trade tensions between India and the United States. On Thursday, the rupee rose by 11 paise to close at 87.58 against the US dollar.

Currency traders attributed the rupee’s decline to several factors, including the US imposing steep tariffs on Indian goods, continuous outflows of foreign funds, and increased demand for the dollar at the end of the month. Additionally, a downturn in the domestic stock market further weakened investor confidence.

This is the first time the rupee has breached the 88 mark against the US dollar. On February 10, 2025, the unit reached an intra-day low of 87.95, and on August 5, 2025, it settled at 87.88 against the US dollar.

“We expect the rupee to trade with a negative bias as additional trade tariffs on India by the US raise worries about India’s trade deficit. Weak domestic markets and selling pressure from FIIs may pressurise the rupee further,” said Anuj Chaudhary, research analyst - currency and commodities - Mirae Asset ShareKhan.

“The dollar may continue to remain weak on rising rate cut expectations in September. USD-INR spot price is expected to trade in a range of 87.90 to 88.70,” Chaudhary said.

“The US tariffs are likely to prolong India’s balance of payment stress, keep financial flows weak, and widen the trade deficit. My view remains bearish on the rupee, with dollar/rupee likely to rise more despite a broadly weaker dollar,” Dhiraj Nim, FX strategist at ANZ Bank, said.

Washington has imposed a steep 50 per cent tariff on Indian goods entering America from August 27. This high duty is expected to impact exports of certain labour-intensive sectors, such as textiles, leather, footwear, and shrimp.