FX.co ★ Indian Rupee Extends Rebound from Record Low

The Indian rupee has strengthened to over 86.4 per USD, continuing its recovery from the record low of 88 seen on March 7th. This improvement comes amid a retreat in the value of the dollar and a decrease in oil prices. Crude oil prices are near their lowest levels in more than three years, which helps mitigate potential rupee outflows since India imports over 90% of its oil to support its economy. Nonetheless, the Reserve Bank of India (RBI) is anticipated to maintain its monetary easing cycle to support economic growth. India's GDP growth rate has decelerated to 6.5% in the current financial year, compared to 8.2% in the previous period. This slowdown aligns with a prolonged phase of elevated interest rates and stringent currency controls aimed at stabilizing the rupee, which have resulted in reduced liquidity within the Indian financial system. Consequently, the RBI has opted to cut interest rates and ease its currency peg. At its last meeting, the RBI implemented its first rate cut in nearly five years, aligning with market expectations.