The Indian rupee hovered around 88.6 per USD, trading in a tight range near all-time lows, after subdued inflation fueled expectations of a December rate cut. India’s retail inflation slumped to 0.25% in October, the lowest on record and well below the RBI’s 2%-6% tolerance band for a second consecutive month. This gives the central bank room to support growth amid slowing economic momentum and ongoing trade pressures from US tariffs on Indian exports. Economists are projecting a 25 bps cut in December, with another possible cut in February. Markets now watched for signs of a potential US-India trade deal after an Indian official said New Delhi is awaiting Washington’s formal response, following President Trump’s remarks that a deal is close. Analysts say a breakthrough could lift the rupee and attract foreign inflows. The RBI has been defending the 88.80 level for over a month, repeatedly stepping in to prevent a break lower amid strong importer dollar demand and weak portfolio flows.
