July trade gap expansion and rising commodity prices offset by central bank activity and $2.5bn foreign bond inflows.
India’s trade deficit widened to $31.98bn in July from $30.4bn in June, pressuring the rupee amid higher oil and gold prices. The Reserve Bank of India reportedly intervened in foreign exchange markets to stabilize the currency.
Headline CPI rose to 4.45% year-on-year in July, reinforcing the RBI’s decision to maintain its policy stance. Non-resident investors injected $2.5bn into Indian Government Bonds in August, providing additional support to the INR.
The dovish repricing of Federal Reserve policy expectations was countered by rebounding commodity prices, balancing external pressures on the rupee.