FX.co ★ Indian Rupee Weakens to 1-Month Low

In July, the Indian rupee depreciated to over 86.35 per USD, reaching its lowest point in a month. This occurred as the dollar's decline stalled amid traders' considerations of a dovish Reserve Bank of India (RBI) and the bleak trade outlook with the United States. India's trade representatives have indicated that securing an interim trade agreement with the US before the August 1st deadline appears challenging, likely resulting in the imposition of stringent tariffs on Indian goods in the near future and consequently dampening the export demand for Indian corporations. This situation was exacerbated by US President Trump's warnings of tariffs on BRICS nations and countries involved in the re-exportation of Russian energy products, further threatening foreign investment inflows. On the monetary policy front, consumer inflation has dropped to 2.1%, marking a six-year low and falling substantially below market predictions, thus testing the lower limit of the RBI's inflation target range of 2%. As a result, there is market anticipation that the RBI will continue to lower its benchmark interest rate throughout the year.