Under the impact of high tariffs from the United States, the Indian rupee hovers near historical lows, and its future performance is likely to continue lagging behind other Asian currencies
Against the backdrop of high tariffs imposed by the United States on India, the Indian rupee weakened on Monday, hovering near historical lows. Analysts expect the rupee's performance to continue lagging behind other Asian currencies. Data shows that the exchange rate of the dollar to the rupee is reported at 88.27, making the rupee the worst-performing Asian currency, with a depreciation of about 3% against the dollar. A Goldman Sachs report indicates that the high tariffs faced by India will suppress exports in key industries, potentially dragging down GDP growth and further increasing depreciation pressure on the rupee
According to Zhitong Finance APP, the Indian rupee weakened on Monday, hovering near historical lows. Analysts expect that, against the backdrop of high tariffs imposed by the U.S. on India, the rupee's performance will continue to lag behind other Asian currencies. Data shows that the exchange rate of the dollar against the rupee is reported at 88.27, slightly above the historical high of 88.3075 set last Friday. So far this year, the rupee has become the worst-performing Asian currency, depreciating about 3% against the dollar. In contrast, the Thai baht, Singapore dollar, and South Korean won have all risen over 6%, while the offshore yuan has increased by 3%.
The weak performance of the rupee is expected to persist, as India faces the highest export tariffs to the U.S. among Asian economies. According to a notice issued by the U.S. Department of Homeland Security, starting August 27 local time, the U.S. will impose tariffs on all goods imported from India for consumption or storage, bringing the total tax rate to 50%. The U.S. had previously imposed a 25% "reciprocal tariff" on Indian goods, effective from August 1, 2025. This latest punitive tariff of 25% is due to India's continued purchase of Russian oil.
Goldman Sachs stated in a report: "Considering the latest developments in U.S. tariffs, their macroeconomic impact, and capital flow conditions, we believe the rupee will remain under pressure in the short term and continue to lag behind other arbitrage currencies and Asian peers." Goldman Sachs economists estimate that the effective combined tariff rate on Indian goods by the U.S. has now reached approximately 32%.
The high tariffs imposed by the U.S. on India may suppress exports in key sectors such as textiles, gems, and jewelry. A slowdown in export growth could drag down India's GDP growth, thereby weakening portfolio capital inflows and further increasing depreciation pressure on the rupee. Data shows that in the past three trading days, foreign investors have withdrawn $2.4 billion from the Indian stock market, including nearly $950 million withdrawn in a single day when the rupee hit its historical low last Friday. Continued capital outflows are expected to exacerbate the volatility of the Indian currency and stock market
