FX.co ★ Indian Rupee Firms at 3-Week High

On Wednesday, the Indian rupee traded around 87.1 per dollar, maintaining its largest gain in over a month and remaining close to a three-week high. This performance was bolstered by diminishing US tariff risks and positive sentiment surrounding New Delhi's tax reforms. Optimism surged regarding a potential peace agreement between Russia and Ukraine, especially after President Trump reaffirmed US support for Ukraine's security during a summit at the White House. This development heightened expectations that Washington might relax the additional 25% tariffs on Indian goods, which have been influenced by India's oil imports from Russia, providing some currency relief. Domestically, Prime Minister Modi’s proposal to reduce the goods and services tax—the most comprehensive reform in eight years—has fueled optimism for increased consumption and a boost in short-term growth momentum. This initiative is anticipated to rejuvenate foreign portfolio inflows following recent withdrawals. At the same time, the rupee resisted the dollar's upward trend, halting its recent weakening pattern due to the Reserve Bank of India's efforts to prevent another record low and the unwinding of long dollar positions.