Overview

• The rupee settled at 87.07 per U.S. dollar on Wednesday after recovering from early losses, holding near Tuesday’s strongest levels in weeks around 87.
• Sentiment improved as the perceived risk of fresh U.S. tariffs eased following talks involving President Donald Trump, Vladimir Putin and Volodymyr Zelenskiy, with Nomura noting reduced sanction risk linked to Russian oil purchases.
• Domestic tailwinds included proposed GST rationalisation and planned tax cuts, alongside an S&P upgrade of India’s sovereign rating to BBB.
• Traders warned gains could stall given softer Asian currencies and uneven foreign flows, with NSDL data showing a modest $116.2 million equity buy on Aug. 18 and net selling the next day.
• Participants also highlighted recent RBI dollar sales alongside an estimated $10 billion weekly drop in reserves, while moves in oil and the dollar index remained key drivers.