Commerzbank reports that the Indian Rupee (USD/INR) eased 0.2% on Friday to 95.20, though it posted a 0.9% gain over the week, remaining within the 94–96 range against the US Dollar [1]. The bank attributes India's macroeconomic backdrop to lower oil prices, which are expected to support domestic demand and ease inflationary pressures. However, Commerzbank highlights that weak monsoon conditions pose downside risks to growth and may prompt the Reserve Bank of India (RBI) to maintain a cautious stance [1].
The final HSBC services PMI for June was reported at 57.4, little changed from the preliminary reading of 57.3 but down from 59.8 in May, marking the weakest reading in 17 months [1]. The composite PMI also declined to 57.1 from 59.3, indicating softer activity across both manufacturing and services sectors [1]. According to Commerzbank, this loss of momentum is attributed to the temporary impact of higher fuel prices following the Middle East conflict, weaker household purchasing power, and below-normal monsoon rainfall [1].
Despite these challenges, export demand remained resilient, reaching a three-month high, while both input cost and output price inflation eased as geopolitical disruptions subsided and oil prices retreated [1]. Looking forward, Commerzbank suggests that lower crude oil prices should continue to support domestic demand and help ease inflation, but persistent monsoon weakness remains a key downside risk to growth and could keep the RBI on hold for an extended period [1].
CONCLUSION
The Indian Rupee remains range-bound as lower oil prices offer some relief to inflation, but weak monsoon conditions continue to threaten economic growth. Market participants are likely to monitor RBI's policy stance closely, given the ongoing risks to the growth outlook.