The Indian rupee depreciated by 13 paise to close at 87.71 against the US dollar on Friday, amid a sharp decline in domestic equity markets and rising uncertainty over the India-US trade deal. Market sentiment remained fragile as President Donald Trump’s aggressive tariff stance further pressured the domestic currency.
At the interbank foreign exchange market, the rupee opened at 87.56 and traded in a narrow range of 87.52 to 87.75 during the day, finally settling at 87.71, compared to its previous close of 87.58 on Thursday.
Forex traders attributed the rupee’s weakness to persistent foreign fund outflows, a slump in equity benchmarks, and mounting concerns over a deepening trade war with the US.
On August 6, the United States announced a second round of 25% tariffs on all Indian imports, bringing total duties to 50%, effective from August 27. This follows President Trump’s earlier decision to impose reciprocal tariffs in response to India’s continued trade engagement with Russia, including oil purchases.
“The Indian rupee declined on Friday on a recovery in the US dollar and weak domestic equities. Uncertainty revolving around the trade war also pressurised the rupee,” said Anuj Choudhary, Research Analyst, Commodities and Currencies, Mirae Asset Sharekhan. He added that a softening in crude oil prices helped limit sharper losses.
Meanwhile, the BSE Sensex plunged 765.47 points to close at 79,857.79, while the NSE Nifty fell 232.85 points to settle at 24,363.30. According to exchange data, Foreign Institutional Investors (FIIs) offloaded shares worth ₹4,997.19 crore on Thursday alone.
President Trump, speaking from the Oval Office, ruled out the possibility of renewed trade talks with India until the tariff dispute is resolved. “No, not until we get it resolved,” he said, signaling a hardline approach ahead of the August 27 implementation date for the new duties.
Despite the ongoing tensions, analysts noted some supportive factors for the rupee. The US dollar index fell by 0.16% to 98.24, amid signs of a weakening labor market in the US and growing expectations of a rate cut by the Federal Reserve.
Brent crude futures also rose slightly by 0.60% to USD 66.83 per barrel, providing minor relief to India’s import bill.
With the geopolitical and economic uncertainty looming large, experts predict the rupee may continue to trade with a negative bias, especially if US-India tensions escalate further or equity markets remain under pressure.