The rupee also slipped 1.25% to Rs. 70.49 a dollar which is the steepest fall since 11 December 2018. So far this year, the Indian currency has declined by 0.2%.
The research paper published by the global agencies indicates that the current trade war may escalate further.
"First, the Fed became the second major Central Bank (after ECB last week) to disappoint markets, as it delivered a less than dovish cut of 25bp. To add to the woes, Trump announced another round of tariffs on the last remaining tranche of Chinese imports. China has already warned of retaliation and now all eyes will be on how China reciprocates, and everything else will likely take a backseat for now, in our view," said Nomura Research in a note.
US officials claim a weak yuan makes China's exports too inexpensive, hurting foreign competitors and swelling Beijing's trade surplus.
On Thursday, Trump vowed to slap 10-per cent tariffs on a further $300 billion worth of Chinese imports starting 1 September.
The Chinese Foreign Ministry said Friday that Beijing was ready to take countermeasures if the US introduces more tariffs on Chinese goods.
The day before Trump's announcement, the US and China ended trade talks in Shanghai, which the White House described as "constructive", saying that China was committed to increasing purchases of US agricultural exports.