NEW DELHI (dpa-AFX) - The Indian rupee strengthened against the U.S. dollar in the European session, as the India's central bank retained its key interest rates.
The Monetary Policy Committee of the Reserve Bank of India, governed by Governor Sanjay Malhotra, unanimously decided to hold the policy repo rate at 5.50 percent.
The bank had reduced the rate by 50 basis points in June and 25 basis points each in February and April.
The governor said inflation outlook for 2025-26 has become more benign than expected in June. The bank downgraded its inflation forecast for the current financial year to 3.1 percent from 3.7 percent projected in June.
At the same time, economic growth for 2025-26 was projected at 6.5 percent, unchanged from the previous outlook.
Investors expected the RBI to indicate a dovish approach regarding the interest rate outlook amid ongoing trade uncertainty with the United States (US), while inflation figures have notably decreased. Trade conflicts between the U.S. and India have intensified as New Delhi continues to purchase oil from Russia.
U.S. President Donald Trump threatened to raise tariffs on Indian goods 'very substantially' within 24 hours, citing India's continued purchases of Russian oil.
Against the U.S. dollar, the rupee rose to a 2-day high of 87.61 from an early low of 87.83.
If the rupee extends its uptrend, it is likely to find resistance around the 86.00 region.
Looking ahead, U.S. weekly mortgage approvals data, Canada S&P Global PMI reports for July and U.S. EIA crude oil data are slated for release in the New York session.
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