FX.co ★ Indian Rupee Slides Further

In July, the Indian rupee depreciated to approximately 86.6 against the US dollar, marking a one-month low and reversing the earlier gains made this year. This shift occurred as traders weighed a dovish stance from the Reserve Bank of India (RBI) alongside a bleak trade outlook with the United States. According to India's trade delegation, reaching a provisional agreement with the US before the August 1st deadline seems challenging. This situation is likely to lead to formidable tariffs on Indian goods in the coming weeks, potentially diminishing export demand for Indian corporations. This issue is exacerbated by US President Trump's threats of tariffs on BRICS nations and countries re-exporting Russian energy products, which risks deterring foreign capital investments. In terms of monetary policy, consumer inflation has plummeted to a six-year low of 2.1%, significantly undercutting market expectations and touching the lower boundary of the RBI's inflation tolerance range of 2%. As a result, there is an expectation among market analysts that the RBI will continue to lower its benchmark interest rate throughout the year.