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Indian rupee extends rally as USD weakens ahead of RBI decision

USD/INR slid to a fresh over two-week low near 95.30, with attention shifting to the Reserve Bank of India policy announcement on Aug. 5.

Reported · Written up by our desk · Major Pairs

The Indian rupee extended its week-long advance against the US dollar on Friday, driving the USD/INR pair to a fresh over two-week low near 95.30 as the dollar weakened overnight amid growing doubts over whether the Federal Reserve is committed to bringing US inflation down, according to FXStreet.

FXStreet cited the US Dollar Index at around 100.23 after it rose 0.27% in the latest reading, even as it had fallen nearly 0.9% on Thursday to about 99.86. The piece also pointed to Fed Chair Kevin Warsh maintaining rate rhetoric without offering forward guidance, while saying the central bank would make necessary monetary policy adjustments to combat inflation.

Oil prices stayed elevated on concerns about prolonged energy supply constraints tied to ongoing attacks between the US and Iran, factors that could weigh on an oil-import heavy currency like the rupee. FXStreet further noted that strategists at TD Securities expect tightening in the global energy balance to support additional upside in crude.

Going forward, FXStreet said the key trigger for the Indian currency is the Reserve Bank of India monetary policy announcement on Aug. 5. Commerzbank expects the RBI to keep its benchmark repurchase rate unchanged at 5.25% at the Aug. 5 meeting.

Latest closeWTI crude $86.80 ▲3.8%|Dollar index 99.80 ▼0.2%

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