FX.co ★ Indian Rupee Inches Up After RBI Holds Rates

The Indian rupee experienced a slight uptick to approximately 88.6 against the US dollar, moving away from its previous record lows. This increase follows the Reserve Bank of India's decision to maintain steady policy rates. The RBI kept the repo rate unchanged at 5.5%, citing that the GST cuts implemented since late September should alleviate inflationary pressures. Additionally, the central bank revised its GDP growth forecast for FY2026 upward to 6.8% from an initial 6.5%, adjusted its inflation expectation downward to 2.6% from 3.1%, and maintained a neutral policy stance. In conjunction with this decision, the RBI introduced initiatives to enhance the global use of the rupee. This includes allowing local banks to extend rupee loans to neighboring countries and establishing official reference rates for the currencies of major trading partners. Despite these measures, Governor Malhotra cautioned that elevated US tariffs might negatively impact exports. The United States has sustained its high tariff of 50% on Indian goods and has recently increased H-1B visa fees, a change poised to affect India more significantly than any other nation. Meanwhile, the rupee found additional support from a weakening US dollar following the shutdown of the US government.