The Indian rupee weakened sharply to 87.12 against the US dollar, marking its lowest level in over four months, after former U.S. President Donald Trump announced a 25% reciprocal tariff on Indian goods. The new tariff regime, set to kick in from August 1, targets countries—including India—that have not signed bilateral trade agreements with the United States.

Market participants reacted swiftly to the announcement, with the rupee facing intense pressure due to fears of deteriorating Indo-U.S. trade relations, a potential slowdown in exports, and a surge in import costs. The move is widely seen as a protectionist step, aligning with Trump's long-standing agenda of reducing the U.S. trade deficit through aggressive tariff policies.

Currency traders also pointed to renewed foreign fund outflows and rising U.S. dollar strength globally as contributing factors to the rupee’s decline. While the Reserve Bank of India (RBI) is expected to monitor the situation, there has been no immediate intervention reported in the forex markets.

India, a key exporter of pharmaceuticals, textiles, and engineering goods to the U.S., may face significant headwinds if retaliatory measures follow. Analysts believe sectors like pharma, auto components, and chemicals could be most vulnerable.

As geopolitical tensions and trade risks escalate, the rupee may remain under pressure in the near term unless clarity emerges on diplomatic negotiations or policy support.