The Indian rupee was little changed around 85.5 per USD, supported by lower oil prices and a softer dollar, though upside was capped by renewed foreign outflows, trade uncertainty and rising geopolitical risks. US President Trump told reporters on Wednesday that he could extend the 90-day tariff deadline, which is scheduled to expire on July 8, but signaled he would instead send letters to trading partners within two weeks outlining unilateral tariff rates. In the meantime, the China-US provisional agreement on rare earths and student visas failed to impress investors. In New Delhi, however, Indian and US officials made progress in talks on industrial goods, agriculture, and tariff barriers, with India’s Foreign Ministry expressing hope to finalize a trade deal before the truce ends. Meanwhile, India’s inflation eased to 2.82% in May, the lowest since February 2019, down from 3.16% in April and below market expectations, bringing it close to the RBI’s lower tolerance band of 2%.
WTI crude oil futures climbed toward $74 per barrel on Monday, extending gains for a second consecutive session after Israel and Iran exchanged attacks over the weekend, heightening fears that escalating tensions could disrupt crude supplies from the Middle East. Israel launched an attack on the giant South Pars gas field in the Persian Gulf, leading to the temporary shutdown of a production platform, following airstrikes on Iran’s nuclear facilities and military leadership last week. While the strikes have yet to stall Iranian oil exports, markets are worried about a worst-case scenario in which Tehran disrupts shipments through the Strait of Hormuz, a vital shipping passage. On Friday, oil prices closed 7% higher, having surged over 13% intraday to reach their highest levels since January. On the trade front, US President Trump said last week he would be setting tariff rates for trading partners over the coming weeks, while details on US-China framework agreement remain unclear.
