Muscat: For the first time in history, the Indian Rupee plunged to a new record low of 88.29 against the US dollar, breaking its previous record of 87.95, which was set in February. The Rupee had started at 87.65 on Friday and ended at 88.18.
Exchange houses in Oman are offering up to 228 for one Omani Rial.
R. Madhusoodanan, a financial expert based in Muscat, told Times of Oman that this was due to the additional tariff that the Trump government placed on India. The imposition of a tax on Indian products entering the United States has caused disruption in India's exports to the United States. Without a question, many industries are concerned about the increased tariff that has made Indian products less competitive in the United States.
The aforementioned has sparked unfavorable sentiments in foreign investors, and Indian equities experienced outflows totaling more than 32,000 crores in August 2025 alone. This has put pressure on the Indian rupee. Coupled with this, monthend pressure on banks heightened the decline. The RBI intervention helped the market to limit the decline, and it eventually closed at 88.12.
Impact on the Indian Economy
India spends a significant portion of its foreign exchange on crude, gold, and electrical goods, among other things. Rupee devaluation raises import costs and expands the trade imbalance. This will also contribute to inflation in the country. The RBI, which has stopped rate cuts, may either maintain the current position or raise rates if inflation statistics exceed the comfort zone.
This may once again restrict the availability of affordable credit to vital sectors such as manufacturing, pharmaceuticals, housing, agriculture, and so on. The Q1 (April-June) growth rate for 2024-25 is 7.8%, surpassing expectations. To ensure sustained progress, several efforts were required to increase internal output at globally competitive rates in order to counteract the uncertainty caused by the tariff crisis.
The government's commitment to stand with the affected sectors may be accepted at face value.
In the current climate, the government will look into the possibility of restricting the import of commodities such as gold to preserve the forex. $58 billion was spent in 2024-25 on gold imports. Last year, the government lowered the basic customs charge (BCD) on gold from 15% to 6%. The nation's foreign currency reserve has fallen to $4.38 billion, with $690.72 billion held as of August 22, 2025. The positive news is that the depreciation of the rupee may lead to increased foreign inbound remittances from NRIs.
Outlook
In the near term, the rupee is likely to remain under pressure due to export issues to the United States and stock outflows. It is true that the value of the rupee has fallen by 3% this year. Though the depreciation has been somewhat greater than that of competitors in Asia, there is no cause for concern. India has since launched measures to lessen its reliance on the US dollar in international trade.
Local currency settlements have started to lower vulnerabilities. For a variety of reasons, the current charge will not be the final one. According to R. Madhusoodanan, the INR trend is likely to be range-bound, with greater volatility anticipated in the short term.
