In an abrupt and unsettling financial turn on August 29, 2025, the Indian rupee took a sharp dive—tumbling past the ₹88-per-dollar threshold for the first time. It recorded an intra-day low of ₹88.31, before recovering slightly to close at ₹88.20 a staggering loss of 57 paise in just one session.

This intense drop wasn’t due to market panic alone. According to forex consultant KN Dey, the rupee breached the former all-time low of ₹87.94, which triggered stop-loss orders and unleashed aggressive dollar buying. The Reserve Bank of India stepped in with heavy intervention to dampen the slide, successfully tempering a freefall but only just.

Externally, a new 25-percentage-point hike in US tariffs doubling duty on Indian goods to 50% cast a long shadow. The move intensified fears over India’s balance of payments, foreign investment inflows, and an ever-widening trade deficit. Growth projections took a hit too, as RBI already had pared back its forecasts after the initial tariff announcement. Now, it may need to do so again if this trend persists.

The ripple effects are wide. Importers scrambled to buy dollars in a scramble, while exporters unwound forward contracts, constrained by US export restrictions. Foreign institutional investors turned net sellers, and equity flows skewed negatively. A troubling note: exports to the US account for around 2.2% of India’s GDP. A slowdown there could even threaten labour-intensive sectors and cost jobs.

“The storm isn’t over,” Dey warned, foreshadowing ongoing volatility. With pressures mounting, all eyes are now on policy responses and global dynamics that will determine whether this crash is a temporary wobble or the start of something more lasting.