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Rupee outlook steadies as RBI seen holding repo at 5.25%
Commerzbank said India’s July CPI stayed within the RBI 2% to 6% target band, and FX reserves rose to about USD 693 billion.
Commerzbank’s FX team said India’s July inflation came in slightly higher but remained within the Reserve Bank of India’s target range, supporting expectations that the central bank will hold its policy stance. It cited July CPI rising to 4.5% year on year, with core inflation steady at 3.9%.
The team noted that while July was the highest reading since December 2024, it still fit inside the RBI’s 2% to 6% band. It also pointed out that inflation averaged 3.6% year to date, staying below the RBI’s 4.0% mid point and below the bank’s FY2026 to 2027 forecast of 5.0%.
According to FXStreet, Commerzbank expects RBI to keep the repo rate unchanged at 5.25%, helped by contained food and energy pressures. The view aligns with remarks from RBI Governor Sanjay Malhotra that inflation is more or less under check.
On currency risk, Commerzbank said India has room to manage short term FX volatility, citing FX reserves near USD 693 billion after rising USD 10.5 billion to that level in the week ended 31 July. FXStreet also reported Commerzbank referenced inflows under the RBI’s FCNR(B) deposit scheme, and noted USD/INR at 95.33, down 0.1% on the day.