- USD/INR retreats from all-time high as bulls take a breather.
- RBI intervention saved rupee after refreshing record low, easy oil prices and a pullback in yields add strength to corrective move.
- Mixed comments from Fed policymakers, China’s He join anxiety ahead of US inflation to favor sellers of late.
USD/INR renews intraday low around 77.30 as bulls step back from a record high amid easy oil prices and chatters surrounding the Reserve Bank of India’s (RBI) intervention on Tuesday.
The Indian rupee (INR) pair rallied to the record top of around 77.50 during the three-day uptrend as a broad risk-aversion wave bolstered the US dollar’s safe-haven demand. Also likely to have favored the USD/INR bulls were headlines concerning pessimism in Asia-Pacific markets due to China’s covid woes, as well as indecision over the RBI’s next move.
The quote’s latest pullback could be linked to the comments from a person familiar with the RBI’s market intervention, as quoted by Bloomberg. “India’s central bank is intervening in all foreign-exchange markets and will continue to do so to protect the rupee that slid to a record low Monday, said a person familiar with the matter,” said the news.
WTI crude oil prices also extend the previous day’s pullback while printing the two-day downtrend targeting the sub-$100.00 area, down 1.40% around $100.00 at the latest. Considering India’s heavy reliance on oil imports, the recent weakness in the WTI helps INR pare some of the latest losses.
Elsewhere, comments from China’s Vice Premier Liu He who reiterates the country’s dynamic covid zero policy also weighed on the USD/INR prices. Furthermore, a mismatch between the latest Fedspeak also helps the pair to ease from the all-time high. Atlanta Fed’s Raphael Bostic promoted a series of 50bps rate lifts. On the other hand, Richmond Fed President Thomas Barkin kept the 75 bps rate hike on the table.
Looking forward, inflation numbers from the US and India, up for publishing on Wednesday and Thursday respectively, are important for clear directions. While the US inflation is expected to ease in April, a Reuters poll suggests that India’s retail inflation is likely to have jumped to an 18-month high during the last month.
Other than the inflation data, central bankers’ comments and headlines from China, as well as from Russia, may entertain USD/INR traders.
Technical analysis
USD/INR pullback remains elusive until staying beyond the previous peak of 77.17, flashed in March, which in turn keeps the buyers hopeful to cross an upward sloping resistance line from December 2021, around 77.51 by the press time.