STEEP TARIFF BILL COULD WEIGH ON INDIAN EXPORTS
The big news this week was the US imposing 25% tariffs on Indian imports plus penal tariffs for trading with Russia. That is going to hit sectors like textiles, chemicals, and jewellery. The Indian game plan is unclear, but India could focus on domestic growth boost as an offset.
In the coming week, the big event is the RBI monetary policy. It comes at a time when inflation is at 77-month lows and growth triggers are uncertain. That may just give the RBI reason to trigger one more rate cut of 25 bps as a growth booster next week.
The table captures US 10-year benchmark bond yields over the last 5 trading sessions.
| Date | Price (%) | Open (%) | High (%) | Low (%) |
| Aug 01, 2025 | 4.220 | 4.376 | 4.414 | 4.202 |
| Jul 31, 2025 | 4.360 | 4.368 | 4.382 | 4.326 |
| Jul 30, 2025 | 4.378 | 4.328 | 4.382 | 4.314 |
| Jul 29, 2025 | 4.328 | 4.408 | 4.422 | 4.320 |
| Jul 28, 2025 | 4.420 | 4.402 | 4.420 | 4.368 |
| Jul 25, 2025 | 4.386 | 4.392 | 4.430 | 4.382 |
Data Source: Bloomberg
The bond yields, this week, fell from 4.386% to 4.220%. While the FOMC did not cut rates on 30-July, the dissent from Chris Waller and Michelle Bowman was enough to temper yields. The consensus is that rate cuts may still happen, albeit back-loaded in 2026. Last week, US 10-year bond yields touched a high of 4.422% and a low of 4.202%.
Here is the US dollar index (DXY), an index of dollar strength, over last 5 trading sessions.
| Date | Price (%) | Open (%) | High (%) | Low (%) |
| Aug 01, 2025 | 99.14 | 100.01 | 100.26 | 98.61 |
| Jul 31, 2025 | 99.97 | 99.80 | 100.10 | 99.52 |
| Jul 30, 2025 | 99.82 | 98.92 | 99.98 | 98.70 |
| Jul 29, 2025 | 98.89 | 98.64 | 99.14 | 98.58 |
| Jul 28, 2025 | 98.63 | 97.58 | 98.68 | 97.49 |
| Jul 25, 2025 | 97.64 | 97.45 | 97.90 | 97.43 |
Data Source: Bloomberg
The US dollar index (DXY) showed a smart bounce this week from 97.64 levels to 99.14 levels. Fed holding rates plus Q2 GDP recovering to 3.0% from -0.5% in Q1 did the trick for the dollar index. The US dollar index (DXY) touched a high of 100.26 and a low of 97.49 this week. It remains to be seen if the 100 level will prove to be a resistance for DXY.
The table below captures 10-year India bond yields for the last 5 trading sessions.
| Date | Price (%) | Open (%) | High (%) | Low (%) |
| Aug 01, 2025 | 6.371 | 6.377 | 6.378 | 6.367 |
| Jul 31, 2025 | 6.376 | 6.384 | 6.384 | 6.364 |
| Jul 30, 2025 | 6.365 | 6.359 | 6.379 | 6.358 |
| Jul 29, 2025 | 6.369 | 6.374 | 6.382 | 6.359 |
| Jul 28, 2025 | 6.373 | 6.352 | 6.374 | 6.348 |
| Jul 25, 2025 | 6.353 | 6.329 | 6.365 | 6.327 |
Data Source: RBI
India bond yields inched up from 6.353% to 6.371%; as the markets are still divided over the rate cut possibility in the August MPC meet. The rise in the bond yields could also be partially attributed to bond selling taking prices down, although FPIs were net buyers. Last week, India 10-year bond yields touched a high of 6.384% and low of 6.348%.
The table captures the official USDINR exchange rate for last 5 trading sessions.
| Date | Price (₹/$) | Open (₹/$) | High (₹/$) | Low (₹/$) |
| Aug 01, 2025 | 87.245 | 87.490 | 87.673 | 87.170 |
| Jul 31, 2025 | 87.524 | 87.715 | 87.796 | 87.501 |
| Jul 30, 2025 | 87.691 | 87.058 | 87.846 | 87.050 |
| Jul 29, 2025 | 87.108 | 86.770 | 87.108 | 86.735 |
| Jul 28, 2025 | 86.697 | 86.481 | 86.725 | 86.402 |
| Jul 25, 2025 | 86.503 | 86.432 | 86.641 | 86.405 |
Data Source: RBI
Amidst the tariff uncertainty and the penal tariffs; the USDINR weakened from ₹86.503/$ to ₹87.691/$; and spent the last 3 days above the ₹87/$ mark. The spike in dollar index only added to the pressure on the USDINR. Last week, USDINR touched a high of ₹86.402/$ and a low of ͅ₹87.846/$. Banks continued to buy dollars aggressively.
The table captures the Brent Crude prices over last 5 trading sessions.
| Date | Price ($/bbl) | Open ($/bbl) | High ($/bbl) | Low ($/bbl) |
| Aug 01, 2025 | 69.67 | 71.83 | 72.00 | 69.40 |
| Jul 31, 2025 | 72.53 | 73.53 | 73.53 | 72.40 |
| Jul 30, 2025 | 73.24 | 72.57 | 73.63 | 71.75 |
| Jul 29, 2025 | 72.51 | 70.28 | 73.08 | 69.86 |
| Jul 28, 2025 | 70.04 | 68.54 | 70.45 | 68.35 |
| Jul 25, 2025 | 68.44 | 69.36 | 69.86 | 68.31 |
Data Source: Bloomberg
During the week, Brent Crude surged to $73.63/bbl on concerns over Russian sanctions. However, OPEC supply concerns brought crude to below $70/bbl at close to $69.67/bbl. Last week, Brent Crude touched a high of $73.63/bbl and a low of $68.35/bbl. A lot will depend on whether India continues to buy oil from Russia or decides to pander to the US.
The table captures the international spot prices of gold in dollars per troy ounce (oz).
| Date | Price ($/oz) | Open ($/oz) | High ($/oz) | Low ($/oz) |
| Aug 01, 2025 | 3,362.88 | 3,290.83 | 3,363.55 | 3,281.55 |
| Jul 31, 2025 | 3,290.32 | 3,275.91 | 3,314.98 | 3,273.77 |
| Jul 30, 2025 | 3,275.25 | 3,324.01 | 3,334.21 | 3,268.15 |
| Jul 29, 2025 | 3,326.84 | 3,316.54 | 3,334.21 | 3,307.95 |
| Jul 28, 2025 | 3,314.64 | 3,335.00 | 3,345.56 | 3,301.66 |
| Jul 27, 2025 | 3,333.68 | 3,329.43 | 3,337.36 | 3,323.98 |
| Jul 25, 2025 | 3,337.18 | 3,369.29 | 3,373.73 | 3,325.05 |
Data Source: Bloomberg
Spot gold prices are confused between demand and the Trump crypto plan. There are concerns that an aggressive crypto policy could dent the demand for gold. During the week, gold touched a high of $3,363.55/oz and a low of $3,268.15/oz.
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