Rupee falls 18 paise to 87.76 against U.S. dollar in early trade

The rupee depreciated 18 paise to 87.76 against the U.S. dollar in early trade on Friday (August 29, 2025), weighed down by persistent foreign fund outflows and month-end dollar demand.

Forex traders said the rupee is under persistent pressure as the weakness from Mr. Trump tariffs was being countered by a softer U.S. dollar, giving the local currency some much-needed breathing space.

At the interbank foreign exchange market, the rupee opened at 87.73 against the U.S. dollar, then fell to 87.76, registering a decline of 18 paise over its previous close.

On Thursday, the rupee rose by 11 paise to close at 87.58 against the U.S. dollar.

“Market sentiment remains fragile due to the impact of U.S. tariffs and selling by FPIs to the tune of ₹34,733 crore of Indian equities in August 2025,” Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.

The U.S. tariffs are expected to weaken Indian exports to the US and deepen the trade deficit and put strain on the rupee, further pressurising import costs and thus fuelling domestic inflation, Bhansali said.

The rupee opened a tad weaker and is likely to stay in the range of 87.40-87.90 for the day, with a close watch on RBI selling dollars to protect the rupee.

The Reserve Bank of India, in its latest bulletin on Thursday (August 28, 2025), said persisting uncertainties related to the U.S. trade policies pose downside risk to the overall demand in the Indian economy, while the inflation outlook for the near-term has become more benign than anticipated earlier.

Meanwhile, the government is working on extending support measures for exporters, such as the rollout of export promotion missions, and a moratorium on loans to help them insulate from the impact of the US’s 50 per cent tariffs on Indian goods, according to an official.

The government official also said this is a wake-up call and an opportunity to diversify the export basket.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.18% to 97.99.