Rupee Gains but Faces Pressure from U.S. Tariff Concerns

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The Indian rupee started Tuesday’s trade (September 9, 2025) on a positive note, rising by 14 paise to reach 87.95 against the U.S. dollar. This small improvement came as the Indian stock market showed strong gains in the morning session. However, experts say the rupee’s recovery may not last long because of global uncertainty and fears over new U.S. trade tariffs on India.

Why the Rupee Rose Today

At the interbank foreign exchange market, the rupee opened at 87.98 and quickly touched 87.95, showing strength compared to its previous close of 88.09. The rise came after Indian stock markets started the day on a high, with Sensex jumping over 366 points to 81,154.17 and Nifty climbing more than 100 points to 24,874.50. A rebound in IT stocks also helped support market sentiment, lifting the rupee slightly.

Rupee’s Recent Weakness

The rupee has been under heavy pressure in recent weeks. On September 5, it fell to its lowest intraday level ever at 88.38 against the dollar before recovering slightly by the day’s close. Just a few days earlier, on September 2, the currency had already touched its weakest closing level of 88.15. These record lows have raised concerns that the Reserve Bank of India (RBI) may need to step in and intervene in the currency market to prevent further losses.

Global Factors at Play

The U.S. dollar index, which measures the dollar’s value against six major world currencies, was at 97.40 in Tuesday’s session, slightly weaker after disappointing U.S. jobs data. The U.S. non-farm payroll report showed slower job creation, and the unemployment rate rose to 4.3%. This has fueled expectations that the U.S. Federal Reserve may cut interest rates during its next meeting on September 17, with some analysts even predicting a large cut of 50 basis points.

Currency experts believe the upcoming U.S. inflation report (Consumer Price Index for August), due on September 11, will play a major role in deciding the direction of the dollar and global markets. A softer inflation reading may give the Fed more room to cut rates aggressively, which could weaken the dollar further. But if inflation is higher than expected, the Fed may hesitate, creating fresh volatility across global currencies, including the rupee.

Oil Prices and Tariff Tensions

Adding to the challenges, global oil prices were slightly higher, with Brent crude trading at $66.37 per barrel. For India, which imports most of its oil, higher crude prices usually put more pressure on the rupee.

The situation has become more complicated with rising trade tensions between India and the U.S. On Monday (September 8), White House trade advisor Peter Navarro made sharp remarks against India, warning that New Delhi must compromise in ongoing trade talks or risk damaging its relations with Washington. He described India as the “Maharajah of tariffs,” accusing the country of keeping trade barriers too high. His comments have created fresh worries about the future of India-U.S. trade ties.

Market Experts Speak

Currency market analysts believe that while softer U.S. economic data and possible Federal Reserve rate cuts could support the rupee in the short term, India’s challenges with trade and tariffs may limit any strong recovery. “Upside risks remain intact,” one expert noted, adding that RBI intervention might be necessary if the rupee weakens again.

Meanwhile, foreign institutional investors (FIIs) sold shares worth ₹2,170.35 crore in the Indian equity market on September 8, showing that overseas investors remain cautious. Heavy FII outflows often hurt the rupee further, as they increase demand for the U.S. dollar.

What Lies Ahead

Looking ahead, traders will keep a close eye on two major events: the U.S. inflation report on September 11 and the Federal Reserve’s policy meeting on September 17. Both will influence how the dollar moves in the coming weeks. At the same time, any new developments in U.S.-India trade relations could add fresh pressure to the rupee.

For now, the rupee has managed to recover slightly, but experts caution that global uncertainty, high oil prices, foreign investor outflows, and trade tensions mean the currency may remain under pressure in the near term.

India-U.S. trade tensions