Indian Rupee Holds Near Record Low Despite GST Cuts

The Indian rupee hovered around 88.15 per dollar, trading near its record low, as concerns over the impact of steep US tariffs offset India’s GST reforms. The government revised GST rates, cutting the four-tier system to two slabs—5% and 18%—and introducing a 40% rate on luxury and sin items, effective September 22, to support household consumption and offset revenue losses. Still, the rupee remained under pressure, as Indian goods faced a 50% levy under US measures on Russian oil imports, while continued foreign fund outflows from equities added to the currency’s weakness. Meanwhile, the US dollar struggled as labor market weakness—including fewer job openings and rising layoffs—has traders largely pricing in a September Fed rate cut, providing some support for the rupee. Attention now turns to US nonfarm payrolls for a fuller view of labor conditions. Looking ahead, India-EU trade talks enter a key phase next week amid the backdrop of recent US tariffs and ongoing trade tensions.