Indian Rupee: INR strengthens against US Dollar on trade optimism - Societe Generale

The lower end of the six-month 94.14-96.95 range is drawing closer for USD/INR as recent FX-supportive measures from the Reserve Bank of India (RBI) lend support, according to Societe Generale strategists. Alongside RBI concerns over inflation, they point to speculative INR purchases driven by hopes of a possible US-India trade agreement and strong foreign interest in the Reliance Jio IPO. However, they caution that the rally’s staying power will depend on oil prices, flows and the direction of the US Dollar (USD).

RBI measures help stabilise the rupee

"USD/INR is quietly gravitating toward the lower end of its six-month 94.14-96.95 range, supported by a series of FX-supportive measures unveiled by the RBI in recent weeks."

"The latest round of INR buying may be speculative on optimism surrounding a potential US-India trade agreement."

"Solid foreign participation in the ongoing $3.2bn Reliance Jio IPO may also be helping."

"The RBI minutes published yesterday confirmed growing concern over the inflation outlook."

"While RBI actions are helping stabilise the currency for now, the durability of the rally will ultimately depend on oil prices, portfolio flows and the broader direction of the dollar."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)