FX.co ★ Indian Rupee Holds Rally

In July, the Indian rupee surpassed 85.7, retaining most of the gains achieved since late June. This uptick was propelled by relatively softer energy prices and bullish momentum in India's economy, which helped counterbalance concerns about trade uncertainties. The steady flow of tankers passing through the Persian Gulf into the Indian Ocean and an increase in output by OPEC+ nations calmed fears of a sharp rise in India’s oil and fuel imports, thereby safeguarding against capital outflows, as energy remains India's largest import. Meanwhile, robust economic indicators continued to bolster predictions for strong domestic growth, exemplified by June's PMI reaching a notable 61. This economic strength supported the rupee's resilience and allowed the Reserve Bank of India (RBI) to augment its foreign exchange reserves, which recently exceeded $700 billion, marking a 10-month high. However, uncertainty persisted regarding US tariffs. Although the US abstained from implementing new tariffs in its latest discussions, it did issue tariff warnings directed towards BRICS countries.