The Indian Rupee surrendered its early gains to finish lower on Monday, as worries about high tariffs on Indian products boosted demand for the Dollar, with importers’ buying adding to the pressure.

The currency ended 0.1% down at 87.58, compared with 87.53 in the prior session.

Having opened at 87.39 and reaching a day’s high of 87.3450, the Rupee faced selling pressure throughout the day due to Dollar purchases by importers, Reuters news agency reports.

“An additional 25% tariff is set to be enforced on August 27. This move will reduce Indian exports, widen the trade deficit, and add further stress to the Rupee,” according to Amit Pabari, managing director at CR Forex.

Starting on Wednesday, Indian goods will be subject to additional US tariffs of up to 50%.

Washington had already imposed 25% tariffs on Indian products, higher than those applied to many other major trading partners, and the planned increase is a response to New Delhi’s ongoing purchases of Russian crude.

Meanwhile, indications that progress toward a Ukraine-Russia peace deal has stalled have strengthened expectations that the new US tariffs on Indian goods will go ahead, with little chance of negotiations altering the outcome.

Sentiment toward the Indian Rupee was affected after Fitch maintained India’s long-term foreign-currency issuer default rating at 'BBB-'.

The currency had gained earlier in the day following remarks from Federal Reserve Chair Jerome Powell, who suggested the possibility of a rate cut in September, which weighed on US yields and the Dollar.

On Friday, Powell noted that while risks to the job market were increasing, inflation remained a concern, underscoring that no decision had been finalised.

Traders are currently pricing in almost a 90% probability of a 25-basis-point rate cut at the September 16-17 policy meeting, with a total of 48 basis points in reductions expected through 2025, according to LSEG data.