On August 5, 2025, the Indian rupee fell to a fresh all-time closing low of ₹87.80 per US dollar, as escalating trade tensions with the United States and escalating market volatility weighed on investor confidence and foreign exchange markets
Market Drivers Behind the Fall
Renewed threats from U.S. President Trump of imposing steep tariffs on Indian goods—especially due to India’s oil trade with Russia—triggered a wave of investor anxiety. The rupee tumbled nearly 2.6% year-to-date, recording its worst monthly decline in July
RBI Intervention and Intraday Dynamics
The rupee briefly dipped as low as ₹87.8850 intraday, nearing the all-time low of ₹87.95 witnessed in February, before central bank intervention through state-run banks helped curb further losses. The Reserve Bank of India reportedly sold dollars to prevent the currency from breaching ₹88
Technical Outlook & Trading Range
Analysts warn that a sustained break above ₹87.95 could open the door to testing ₹88.50. Conversely, a bounce back below ₹87.60 may signal consolidation. Traders expect the currency to trade within the ₹87.00–87.80 range in the near term, with RBI support seen as key to limiting volatility
Broader Macro Context
Despite softer U.S. job data fueling Fed rate cut expectations, local dollar demand—especially from importers and state-owned oil companies—continued to drive pressure on the rupee. Combined with capital outflows, this offset the global dollar weakness and weighed heavily on INR performance Reuters
Conclusion
The rupee’s drop to ₹87.80 per dollar underscores growing economic headwinds from mounting tariff risks and capital flow disruption. While RBI intervention prevented a breach of ₹88, ongoing policy developments and global economic cues will shape whether the currency stabilizes or succumbs to fresh lows.
