The Indian rupee weakened toward 86.6 per USD in July, the lowest in one month and erasing its appreciation from earlier in the year as traders considered a dovish RBI and the pessimistic trade outlook with the US. India's trade delegation noted that an interim deal with the US looks difficult before the August 1st deadline, likely resulting in aggressive tariffs on India in the coming weeks, and reducing export demand for Indian conglomerates. This was magnified by US President Trump's tariff threats on BRICS members and countries re-exporting Russian energy goods, jeopardizing foreign capital inflows. On the monetary policy front, consumer inflation feel to a a six-year low of 2.1%, well below market expectations, to test the lower bound of the RBI's inflation tolerance band of 2%. Consequently, markets expect the RBI to continue reducing its benchmark policy rate this year.