Rupee trades lower amid FPI outflows, tariff woes; opens above 88 mark

Indian Rupee today: The domestic currency opened 3 paise lower at 88.23 against the dollar on Monday, according to Bloomberg

The Indian Rupee opened slightly weaker on Monday and held above the 88 mark against the dollar, pressured by foreign outflows and the impact of trade tariffs. 

 

The domestic currency opened 3 paise lower at 88.23 against the dollar on Monday, according to Bloomberg. The Rupee has slipped 3.15 per cent in the current financial year. So far this year, the rupee has depreciated 3.01 per cent, making it the worst performer among Asian peers.

 

The currency could remain under pressure as United States (US) tariffs, foreign portfolio investor outflows, and weakness in government bonds weigh on sentiment, according to Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP. Yields on the 10-year bond rose to nearly 6.70 per cent before easing to 6.57 per cent.

   

The rupee hit an all-time low of 88.31 last Friday after the Reserve Bank of India (RBI) allowed it to breach 87.80, a level it had been defending for six months, and surpass its previous record low of 87.95, Bhansali said. "The 50 per cent tariffs are expected to hurt portfolio inflows, even as India continues talks with the United States on trade and tariff issues." 

 

Meanwhile, India’s gross domestic product (GDP) grew 7.8 per cent in the first quarter (April-June) of the financial year 2025-26 (FY26), hitting a five-quarter high. However, Nominal GDP increased 8.8 per cent to ₹86.05 trillion during the June quarter. A slowdown is likely in the second quarter due to spillover effects from the tariffs, analysts said. 

 

Foreign exchange reserves fell by $5 billion to $691 billion as of August 22, 2025, as the RBI sold dollars to support the rupee. The central bank may allow further depreciation to maintain competitiveness against peers facing lower tariffs, Bhansali said. "Exporters who sold at 87.80 may now wait for further declines, while importers are advised to hedge on major dips and cover near-term payables on smaller ones."

 

In geopolitical news, Indian Prime Minister Narendra Modi said New Delhi was committed to improving ties with China in a key meeting with President Xi Jinping on Sunday. Both leaders discussed the need to expand trade and investment ties against the backdrop of US tariffs.

 

The dollar index, a measure of the greenback against a basket of six major currencies, was down 0.06 per cent at 97.71. This comes after a US federal appeals court ruled that US President Donald Trump's trade tariffs were illegal. 

 

In commodities, crude oil prices held in a tight range amid the impact of US tariffs on demand. Brent crude price was down 0.40 per cent at 67.21 per barrel, while WTI crude prices were lower by 0.37 per cent at 63.65 per barrel, as of 63.77 AM IST.