The Indian rupee dropped against the US dollar after Donald Trump delivered a speech threatening to substantially raise tariffs on Indian exports due to India’s continued imports of Russian oil. On August 5, 2025, the rupee neared a record low, briefly touching 88.10 per US dollar before intervention from the Reserve Bank of India helped limit losses. Market participants directly attributed the currency’s sharp decline to Trump’s remarks, which sparked new fears of foreign fund outflows and market volatility in India. The heightened uncertainty comes just ahead of an important interest rate decision by India’s central bank, adding to market anxieties. Analysts highlighted that while a weaker rupee could help offset some tariff impacts for exporters, it also signals global investor concerns about India’s outlook.
In a separate set of remarks, US President Trump addressed the ongoing trade negotiations with China, stating that Chinese President Xi Jinping had called for a meeting. Trump said that he would meet with Xi before the end of the year if a trade deal is reached, and emphasized, “We’re getting very close to a deal.”
Trump also announced several new trade measures. He said the US would impose an initially small tariff on pharmaceuticals, which will increase to 150% and even 250% after one year. He added that he would announce additional measures relating to semiconductors and chips in the coming week. Finally, Trump warned that the US would impose a 35% tariff on the European Union if it does not meet its trade obligations.
Indian Rupee trades near all time low against USD (all time high for USDINR forex pair). Source: xStation
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