Rupee drops 17 paise to 88.26 versus the U.S. dollar in early trading.

Rupee Depreciates Amid Investor Concerns

The rupee fell by 17 paise to 88.26 in early trading on Monday, September 1, 2025, primarily influenced by investor sentiment.

Forex traders noted that the rupee started off weak today, with pressures stemming from tariffs imposed by the US and foreign portfolio investment (FPI) outflows impacting the local currency.

In the interbank foreign exchange market, the rupee opened at 88.18 but quickly lost ground, ultimately recording the decline of 17 paise noted earlier.

Last Friday, August 29, 2025, the rupee crossed the psychologically significant 88 mark against the US dollar, closing at an all-time low of 88.09.

According to Anil Kumar Bhansali, executive director of Finrex Treasury Advisors LLP, the Reserve Bank of India (RBI) responded to the pressure and saw the rupee hit a record low of 88.31. He mentioned that a protective level of 87.95 that he had maintained for the past six months was also breached.

Bhansali pointed out that a 50% tariff could significantly hamper portfolio inflows, especially as India engages in discussions with the US over trade and tariff matters. The implications of these tariffs on economic growth and the widening trade deficit could be concerning, even though GDP showed a promising growth rate of 7.8% in the first quarter of the fiscal year. However, he suggested that there could be a slowdown in the second quarter due to the tariff’s repercussions.

Recent government data released on Friday indicated that India’s economy grew at a stronger-than-expected 7.8% from April to June, marking its fastest growth in five quarters.

Meanwhile, the dollar index, which gauges the strength of the greenback against a basket of six currencies, saw a slight drop of 0.07% to 97.70.

In terms of global commodities, Brent crude oil was trading at $67.20 per barrel, down by 0.41% in futures trading.

Looking at domestic stock markets, the Sensex opened at 80,153.11, rising by 343.46 points, while the Nifty increased by 105.8 points to reach 24,532.65.

Data from the Exchange showed that foreign institutional investors sold shares worth ₹8,312.66 crore on Friday, August 29, 2025.

Moreover, the RBI announced that the nation’s foreign exchange reserves had decreased from $438.6 billion to $69.072 billion in the week ending August 22. Bhansali noted that as the RBI sold dollars to support the rupee, it might consider allowing the rupee to depreciate to maintain competitiveness against countries with lower tariffs than India.