FX.co ★ Indian Rupee Holds Near 2-Week High

The Indian rupee has stabilized around 87.3 against the dollar, maintaining proximity to a two-week peak as it rebounds slightly from near-record lows. This shift occurred following Prime Minister Narendra Modi's announcement of significant tax cuts, which include a proposed dual-rate structure of 5% and 18%. These measures aim to stimulate consumption and lure foreign investment, addressing concerns that were exacerbated by US tariff policies. Additionally, market sentiment was buoyed by renewed, albeit tentative, expectations of progress in the Russia–Ukraine dialogue after US President Trump held discussions with Russian President Putin. However, for India, the geopolitical landscape remains a pivotal factor that could potentially cap the rupee's gains. The US still plans to impose a further 25% tariff on Indian imports related to its oil trade with Russia, slated for August 27, and has also canceled a scheduled trade delegation visit to New Delhi. Concurrently, the Reserve Bank of India has intensified its efforts towards de-dollarization by implementing regulations to expedite rupee-rouble transactions via vostro accounts, thereby enhancing bilateral trade with Russia.