Indian Rupee: Lower oil and inflows support INR against US Dollar – OCBC
OCBC’s Christopher Wong and Sim Moh Siong highlight that the Reserve Bank of India's (RBI) decision to hold the repo rate at 5.25% while lowering inflation forecasts and nudging growth higher, alongside strong capital inflows, has put India’s balance of payments on track for a healthy surplus.
Indian Rupee (INR) strengthened against the US Dollar (USD) due to lower oil prices, rising reserves, and strong capital inflows, according to OCBC's Christopher Wong and Sim Moh Siong. The Reserve Bank of India (RBI) held the repo rate at 5.25% and lowered its inflation forecasts and growth projections, while attracting USD41bn of capital inflows.
The RBI reiterated that the exchange rate should remain market-determined and would curb excessive volatility. USD/INR closed at 95.13, with support at 95 levels and resistance at 95.40 and 95.70. Despite bearish momentum on the daily chart and elevated US Treasury yields, the INR's near-term buffer remained intact due to lower oil prices and strong capital inflows.
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