India: Rupee Weakens Toward Record Low.

The Indian rupee weakened toward 87.7 per USD, remaining close to the record low of 88.1 tested on August 5th after the US doubled its tariff rate against India. US President Trump announced a new tariff of 25% on Indian imports, doubling total to 50% due to the country's continued buying and re-exporting of Russian oil and energy. This was after PM Modi pushed back and stated that Indian firms buy the most favorable inputs 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 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%. The central bank held rates unchanged in its August meeting, as expected, but a majority of the market has positioned itself for another rate cut this year.