FX.co ★ Indian Rupee Holds Near Record High

The Indian rupee has persistently remained below 88 against the USD, marking continuous lows of 88.4 since September began. This trend is driven by anticipated limited foreign exchange inflows alongside a dovish stance by the Reserve Bank of India (RBI). Meanwhile, the United States has maintained a 50% tariff on Indian goods and has threatened to double it, urging G7 nations to follow suit. This pressure comes as India continues to purchase oil and fuels from Russia, despite global scrutiny. In response, Prime Minister Modi defended the move by highlighting that Indian companies are securing the most advantageous energy deals amidst an uncertain economic landscape. On the monetary policy side, consumer inflation was recorded at 2.1% in August, which is near the lower threshold of the RBI's inflation tolerance band of 2%. During its August meeting, the central bank decided to maintain the status quo on interest rates and is expected to do the same in the upcoming October meeting. However, the subdued inflationary environment, coupled with growth concerns arising from trade restrictions, bolsters the argument for another potential rate cut either this year or in the next.