Indian rupee skids to all-time low against the US dollar on tariff worries

The currency fell below the 88-per-dollar mark for the first time

The Indian rupee has now closed lower against the dollar for four straight months. AFP

The Indian rupee slid to an all-time low against the US dollar on Friday, on worries that the tariffs imposed by Washington might hit growth in the world's fifth-largest economy.

The rupee fell to a record of 88.3075 versus the greenback during intraday trading before settling 0.65 per cent lower to 88.1950, its biggest one-day loss since May.

That also marked the first time the currency breached the 88-rupee-per-dollar mark.

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Friday's decline also means the rupee has fallen against the dollar for the fourth straight month.

The US on Wednesday doubled its tariffs to India to 50 per cent – the highest for any Asian country – a move aimed at punishing New Delhi for Russian oil imports and escalating an economic war with global ripple effects.

That has caused a lot of concern for India's domestic economy, South Asia's largest, with consumers and businesses wary of its ill effects.

"The rupee’s sharp volatility against the US dollar in recent months – in the backdrop of continuing geopolitical uncertainties – is set to dent the earnings of some sectors by up to 250 basis points in fiscal 2026," according to a recent note from analysts at Crisil Ratings.

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The Mumbai-based firm had also predicted that the Indian currency would settle at about 88 rupees by the end of India's fiscal 2026 year, which ends on March 31.

"The extent of impact will depend on the exposure to foreign trade, ability to pass on the cost increase and hedging practices. There might also be player-specific impact across sectors based on the extent of unhedged foreign currency debt exposure," they added.

India's stock market benchmarks also felt the brunt of the tariffs. The Bombay Stock Exchange Sensex finished 0.34 per cent lower to post a 1.7 per cent decline for August, while the Nifty 50 retreated 0.3 per cent for a 1.4 per cent monthly drop.

Analysts expect the Reserve Bank of India to intervene in order to support the rupee, although it has not given any indication.

"Domestic support from the RBI and government could bolster local equities," said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.

Indian companies have already made moves to avoid the US tariffs. Players in its vast gold and jewellery sector, for instance, are now pivoting towards bottom line-friendly manufacturing and exporting hubs such as the Gulf in order to offset the effects of the high levies.