Rupee may slip to 87-88 vs dollar as US tariffs bite: ICICI Securities economist

The Indian rupee is expected to come under pressure from the new US tariffs, with experts warning of further weakness in the near term. “Rupee has already underperformed other currencies,” said Abhishek Upadhyay, Senior Economist at ICICI Securities, adding that depreciation would help cushion part of the tariff impact.

Upadhyay stated that the Reserve Bank of India, “may allow some more rupee weakness given downside risk to growth,” and said the currency could “settle towards the higher end of the past ranges and maybe 87–88 to USD in the near term.”

On the broader economic effect, Upadhyay estimated the hit at “maybe, maybe 30–40 basis points impact on growth,” assuming part of the cost is passed to US consumers and that the penalty portion of the tariff is temporary. He cautioned that the full impact would only be visible “if the statistic for, I mean, a few quarters are in a few months.”

Ajay Srivastava, founder of the Global Trade Research Initiative, described the announcement as “a pause in the negotiations,” stating that “Trump being Trump, he uses offensive language and loses friends in the process, but I think they need to deal with India desperately.” He said the unknown penalty component remains the “surprise element” and will ultimately decide the scale of the hit.

Also Read: Why India’s top fund managers aren’t losing sleep over US tariffs

Both experts agreed that the effect on GDP would likely be limited. “Best case scenario, the PS would have been 15% tariffs. We are stuck with 25% tariffs, excluding the penalty impact,” said Upadhyay. Srivastava added that the timing was expected, saying, “If not yesterday, the tariffs would have been announced on India, say, tomorrow. So, 26% was already expected.”

Upadhyay highlighted that exporters had front-loaded shipments ahead of the move, stating that April–June exports to the US rose “roughly 22%” compared to overall goods export growth of just about 2%. That, he said, “provides some cushion, some time for us to see if negotiations work and tariffs come down.”

Also Read: Oil spike temporary, rupee could hit 83 as Fed cuts rates: Kunal Shah

Srivastava also questioned the sustainability of energy-related concessions being sought by the US. “If you see the US production, it’s not sufficient to supply to European demand, forget about the rest of the world,” he said, pointing out that commitments to shift oil purchases away from Russia may be impractical.

For the entire interview, watch the accompanying video

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