Indian Rupee gives back mild gains after RBI leaves Repo Rate steady at 5.25%

The Indian Rupee experienced a slight decline in value following the Reserve Bank of India's (RBI) decision to keep the Repo Rate unchanged at 5.25%. The USD/INR currency pair initially opened near its monthly low of 94.80, largely due to falling oil prices and investors' concerns over the potential US-Iran deal regarding the Strait of Hormuz.

However, the Rupee has managed to regain some of its early losses and is now trading close to 95.12. The RBI Governor, Sanjay Malhotra, has expressed concern over the ongoing conflict in West Asia, which continues to affect global economies and financial markets. He also stated that while core inflation might accelerate towards 5.9% YoY in the third quarter, it is expected to ease back to 5.5% YoY in the fourth quarter.

The economic outlook remains robust, with the Indian economy outperforming expectations in Q1 FY27. However, financial markets remain uncertain about the outcome of the US-Iran negotiations to reopen the Strait of Hormuz, a vital passage for nearly 20% of global energy supply.