06.08.202514:56:15UTC+00Rupee Falls Toward Record Low on Additional Tariffs

On Wednesday, the Indian rupee depreciated past 87.7 per USD, remaining near the record low observed in the previous session. This decline follows the United States' decision to double its tariff rate against India. President Donald Trump implemented an additional 25% tariff on imports from India, citing the nation's ongoing purchase and re-exportation of Russian oil and energy as the reason. Prime Minister Narendra Modi responded by emphasizing that Indian businesses source the most advantageous inputs amidst an uncertain economic environment. The new tariffs effectively double the previous week's rate of 25%, part of the US's recent series of reciprocal tariffs, and pose a threat to the projected foreign exchange inflows into the world's fastest-growing major economy. On the monetary policy front, consumer inflation dropped to a six-year low of 2.1%, falling significantly below market expectations and reaching the lower limit of the Reserve Bank of India's (RBI) inflation tolerance band of 2%. As anticipated, the central bank maintained the current interest rates at its August meeting, though a substantial portion of the market anticipates a further rate cut before the year's end.