On August 1, 2025, the Indian rupee appreciated by 12 paise to close at 87.53 (provisional) against the U.S. dollar, aided by falling crude oil prices and suspected RBI intervention. This gain came despite rising global trade tensions, following U.S. President Donald Trump’s announcement of a 25% tariff on Indian exports and an additional penalty on India’s purchases from Russia. Although the tariffs were officially imposed on August 1, they will take effect from August 7.

The rupee opened at 87.60 at the interbank foreign exchange and touched an intra-day high of 87.20. On Thursday, it had recovered 15 paise from its record low to settle at 87.65. Analysts noted that while the U.S. dollar remained firm due to positive U.S. economic data, the rupee benefited from softening oil prices and reports of RBI stepping in to stabilize the currency.

The dollar index, which tracks the greenback against six major currencies, rose by 0.26% to 100.23. Brent crude slipped 0.31% to $71.48 per barrel as traders factored in the potential economic slowdown from the new tariffs.

According to Anuj Choudhary of Mirae Asset Sharekhan, the rupee is expected to remain under pressure due to weak domestic sentiment, foreign institutional investor (FII) outflows, and concerns around global trade. He expects the USD-INR to trade in the range of 87.15 to 88.

Indian equities declined sharply, with the BSE Sensex falling 585.67 points to 80,599.91 and the Nifty slipping 203 points to 24,565.35. FIIs sold ₹5,588.91 crore worth of shares on Thursday.

Meanwhile, India’s manufacturing PMI rose to a 16-month high of 59.1 in July, reflecting strong demand. The fiscal deficit reached ₹2.80 lakh crore, or 17.9% of the 2025–26 full-year target, by the end of June.