Market Reports
Debt & FX Market Update Highlights – July 2025
Updated:
CareEdge Ratings presents its comprehensive Debt & Forex Market Update for July 2025, outlining key global and domestic economic developments:
🔹 Global Outlook:
The IMF has revised its global growth forecast upward for 2025 and 2026, driven by front-loaded trade activity before tariffs and reduced US tariff rates.
- The BoJ is expected to hold interest rates steady in July, although inflationary pressures are increasing chances of an October hike.
- The ECB has paused its rate changes for the first time since July 2024, while the US Fed is also expected to maintain status quo this month. Markets anticipate two Fed rate cuts later in 2025.
🔹 India Debt & Forex Insights:
- The RBI is unlikely to reduce rates further, barring significant downside risks to growth.
- Banking system liquidity remained comfortable, averaging ₹3.2 lakh crore in surplus during July.
- VRRR auctions briefly pushed the call rate above the repo rate.
- India's 10Y GSec yield increased by 7 bps, reflecting global cues and RBI's cautious stance.
- The credit-deposit growth gap narrowed notably.
- Commercial Paper (CP) issuances surged 19.3% YoY in Q1 FY26, while corporate bond issuances grew 67% YoY to ₹3.45 lakh crore.
- FPI outflows persisted for a second consecutive month in July, driven primarily by equity segments.
- The rupee depreciated 0.5% against the US dollar but remained among the least volatile major currencies globally.
Developments around the US-India trade deal will be crucial for shaping market sentiment and capital inflows going forward.
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