The Indian rupee has dropped to a record low, falling below 88 against the US dollar, as heavy US tariffs and global uncertainty continue to affect investor confidence. The Reserve Bank of India (RBI) is keeping a close watch but isn’t stepping in aggressively to stop the fall.
On August 27, US President Donald Trump imposed a 50% tariff on Indian exports, which shook market sentiment. Since then, the rupee has remained weak, reaching a lifetime low of 88.33 on September 1. On Tuesday, the currency closed at 88.16 after briefly recovering to 87.84 during the day.
RBI Staying Cautious
Experts believe the RBI is choosing not to intervene strongly in the market right now. Instead, it’s allowing the rupee to weaken gradually while trying to prevent sudden, sharp movements.
“The RBI seems to be okay with a weaker rupee, as long as things don’t get out of control,” said Jigar Trivedi, an analyst at Reliance Securities.
The RBI has always said its goal is to reduce extreme ups and downs in the currency, not to fix it at a certain value.
Why a Weaker Rupee Might Help
A falling rupee isn’t always bad — it can actually help Indian exporters. When the rupee weakens, Indian goods become cheaper for buyers in other countries, which can boost exports.
“Letting the rupee fall a bit could help exporters deal with the impact of higher US tariffs,” said a foreign exchange expert.
India’s strong foreign exchange reserves — over $690 billion — give the RBI enough backup to handle any serious problems.
What’s Next for the Rupee?
Market watchers expect the rupee to stay in the 87.50–88.50 range for now. But if trade tensions get worse, the rupee could fall further, possibly to 89.90 or even 90 in the coming months.
“As long as there’s no clarity on tariffs, the rupee will remain under pressure,” said VRC Reddy, Head of Treasury at Karur Vysya Bank.
However, if India and the US settle their trade differences, the rupee could recover to around 86.
On a positive note, analysts say that India’s recent move to cut Goods and Services Tax (GST) rates could boost local demand and reduce some of the negative impact from tariffs.
For now, the RBI is likely to continue managing the rupee’s decline carefully — stepping in only if the fall becomes too fast or too sharp.
