FX.co ★ Indian Rupee Holds Near YTD-High

In April, the Indian rupee reached its strongest level since the beginning of the year, trading at 85 per USD. This appreciation was driven by a weaker dollar and a rally in Indian assets, as India's minimal reliance on exports renders it relatively resilient to recession concerns linked to a U.S. trade conflict. Additional support for the rupee came from limited capital outflows, influenced by increased oil output from OPEC+ nations and U.S. growth concerns, which in turn exerted downward pressure on crude oil and fuel prices—major components of Indian imports. These factors effectively counterbalanced the Reserve Bank of India's anticipated lower interest rates. Recent data revealed that India's inflation rate dropped to its lowest point in over five years as of March, significantly below the RBI's 4% target. Moreover, Indian GDP expanded by 6.5% in the last fiscal year, a decrease from 8.2% in the previous period, compelling the central bank to address growth challenges.