FX.co ★ Rupee Down to Near 3-Week Low

The Indian rupee stabilized around 85.7 per USD, close to its lowest point in three weeks, as uncertainty over US trade policy influenced market sentiment. India still stands as one of the primary US trade partners yet to receive a formal notification regarding tariffs. Indian officials are anticipated to return to Washington shortly to continue negotiations, concentrating on contentious areas such as auto components, steel, and agricultural goods. Contributing to the rupee's downward pressure were strong demand for the US dollar and signs of capital moving out of Indian equities. Concurrently, inflationary pressures showed signs of relief, with consumer price inflation falling to a six-year low of 2.1% in June. Reflecting the easing inflation, the Reserve Bank of India unexpectedly reduced its key repo rate by 50 basis points in May. Economists remain split on whether the RBI will proceed with rate cuts at its August meeting, although the consensus suggests there may be at least one additional 25 basis point cut before year-end.