Rupee Hits Fresh Record Low Amid India–US Trade Tensions.
Anindya Banerjee,
Head Currency and Commodity Research,
Kotak Securities
Mumbai, August 30, 2025: The rupee slipped to a fresh all-time low on Friday, with USD/INR spot at 88.21, down 59 paise intraday, after touching a high of 88.31.
The weakness is being driven by the India–US trade war, which continues to weigh on sentiment. There has been steady hedging demand from importers, coupled with FPI outflows from both debt and equity. Corporate outflows also added pressure, while stop-loss orders were triggered once USD/INR crossed 87.60 and later the 88.00 level.
The rupee remains undervalued relative to its emerging market peers, but near-term direction will likely stay under pressure due to trade war concerns. The RBI is expected to intervene if spot approaches 88.50, though a sustained reversal would require a rollback of the additional US tariffs.
From a technical perspective, USD/INR has given a bullish breakout above 87.50, opening up room for a move towards 89.00, and possibly 89.50 in the short term.
Shrikant Chouhan, Head Equity Research, Kotak Securities, adds:
FIIs continued to be net cash sellers to the tune of Rs. 38,590.26 crore as of Aug ’25.
The domestic equity markets saw a broad decline, as markets weighed the direct and indirect impact of the US imposing a 50% tariff rate on India, contrary to market expectations. Only autos and FMCG, the key beneficiaries of GST rate rationalization, were positive in the past month. FPI flows are expected to remain volatile.
FPI flows in Aug’25 till date were mixed for all key emerging markets. India, Malaysia, Philippines, S.Korea, Taiwan, Thailand, and Vietnam witnessed outflows of US$1,953 mn, US$687 mn, US$57 mn, US$756 mn, US$1,506 mn, US$549 mn, and US$1313 mn, respectively. However, Brazil and Indonesia witnessed inflows of US$27 mn and US$761 mn, respectively.
