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Rupee finds support as RBI holds repo rate at 5.25%
USD/INR eased to about 95.10 after the RBI kept its benchmark repo rate unchanged for a fourth straight meeting and drew roughly $41 billion in capital inflows, though analysts warned US yields and oil volatility could cap further gains.
The Indian rupee found support versus the US dollar after the Reserve Bank of India held its benchmark repo rate steady at 5.25% for a fourth consecutive meeting, according to FXStreet. USD/INR eased to around 95.10 as the RBI retained a neutral policy stance.
FXStreet reported that the RBI said recent inflation “blips” were supply-driven, upgraded its growth projections, and trimmed its medium-term inflation expectations. The rupee also benefited from lower crude oil prices and foreign capital inflows of more than $40 billion.
Analysts highlighted that the RBI’s approach suggested a divergence from some Asian peers that have already moved to tighten policy. Even with June CPI rising to 4.4% year over year, Commerzbank said expectations for an October rate hike were pared back significantly, with probability falling to about 58% from more than 90% before the meeting.
FXStreet also noted that OCBC pointed to the RBI’s capital attraction measures, saying they helped bolster foreign exchange reserves and banking system liquidity. Still, institutional analysts cautioned that elevated US Treasury yields and geopolitical oil volatility, along with US monetary policy expectations, could limit further upside for USD/INR.
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