The Indian rupee weakened to 87.7 per USD, remaining close to the record low of 88.1 on August 5th amid steeper US tariffs on India and the outlook of a dovish RBI. US President Trump announced a new tariff of 25% on Indian imports due to the country's continued buying and re-exporting of Russian oil. This was after PM Modi pushed back and stated that Indian firms buy the most favorable energy in an uncertain economic backdrop. The tariffs double the rate of the 25% imposed last week in the US's latest round of reciprocal tariffs, hurting the outlook of foreign exchange inflows into the world's fastest growing major economy. On the policy front, consumer inflation fell to 1.55%, well below market expectations, to surpass the lower bound of the RBI's inflation tolerance band of 2% for only the third occasion since adopting the target in 2016. The central bank held rates unchanged in its August meeting but a majority of the market has positioned itself for another rate cut this year.