The Indian rupee appreciated slightly to ~₹88.2750 after hitting record lows around ₹88.44, lifted by hopes of a U.S. Fed rate cut.
The gain came even as heavy foreign portfolio outflows continue to challenge the rupee’s strength.
U.S. tariffs on Indian imports—especially connected to India’s purchases of Russian oil—are feeding uncertainty across trade and capital flows.
To ease the burden, the Indian government has introduced consumption tax cuts on multiple goods, aiming to offset tariff impacts for consumers.
The RBI has intervened in foreign exchange markets to moderate sharp swings, though it is not committing to any fixed exchange-rate target.
Investors are closely watching U.S. inflation data, since a softer print could encourage more aggressive Fed easing, benefiting emerging currencies like the rupee.
Meanwhile, India’s bond yields saw some downward bias as inflation moderated and fiscal discipline signals improved.
The rupee’s recent volatility underscores how trade, global dollar strength, and domestic policy moves interact tightly.
Exporters remain wary: while a weaker rupee can help competitiveness, tariff barriers and global demand risks are countervailing factors.
With inflation under control and growth resilient, many analysts believe the rupee will oscillate in its recent range unless a major external shock arises.