Indian Rupee: September gains face structural tests – Societe Generale
Societe Generale strategists highlight that the Indian Rupee’s (INR) strong start to September is reflected in a move back below the 100dma, raising questions about whether Reserve Bank of India (RBI) intervention has helped the currency turn a corner despite a hawkish Fed and higher Oil prices.
Societe Generale strategists have pointed out that the Indian Rupee's (INR) impressive start to September is facing structural challenges despite a return below the 100-day moving average (100dma) on September 2nd, the first time since July 2025. The Reserve Bank of India (RBI) intervention may have helped the currency turn a corner, but concerns remain due to a hawkish Federal Reserve and higher oil prices.
The GDP growth in the second quarter (2Q) came in stronger-than-expected at 7.8% year-on-year, suggesting the economy has weathered the external shock. However, the weak GDP deflator, combined with sharply higher consumer price index (CPI), food prices, and wholesale price index (WPI) inflation, may be overstating the pace of real activity.
The RBI's net short dollar position reached a record $136.8 billion at the end of July, up from $103.3 billion in June. Overall, the broader environment remains structurally challenging for the INR.
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