- USD/INR remains pressured after reversing from record high.
- RBI’s so-called meddling in spot, forward markets defends INR.
- Treasury yields refresh multi-year high as inflation fears join hawkish central banks.
- Fedspeak, RBI’s intervention eyed for fresh impulse as buyer push for entry.
USD/INR takes offers to renew the intraday low near 82.70 while extending the previous day’s pullback from the all-time high during early Friday.
In doing so, the Indian rupee (INR) pair justifies the Reserve Bank of India (RBI) intervention to defend the currency around an all-time low even as firmer yields challenge the pair sellers.
Reuters quotes an anonymous trader from a bank in India as saying that the RBI sold USD/INR aggressively on Thursday, while also adding, “RBI likely to protect psychological 83 level on USD/INR and Thursday’s high of 83.25-83.30.”
The news also mentioned, “Like in previous sessions of late, the RBI did buy/sell swaps alongside spot dollar sales, pushing forward premiums lower. The USD/INR 1-year implied yield dropped to near 2.50%.”
It should be noted that the downbeat oil prices also weigh on the USD/INR due to India’s reliance on energy imports and record current account deficit.
Elsewhere, mostly firmer US data and hawkish Fedspeak underpinned the US Treasury yields to refresh multi-year high. However, the US dollar struggles to avoid the weekly loss.
US Initial Jobless Claims eased to 214K for the week ended on October 07 versus 230K expected and a revised down 226K prior. Further, Philadelphia Fed Manufacturing Survey Index dropped to -8.7 for October versus the -5 market consensus and -9.9 previous reading. Additionally, US Existing Home Sales rose past 4.7M expected to 4.71M but eased below 4.78M prior. Recently, Federal Reserve Governor Lisa Cook mentioned that ongoing rate increases will be required. Previously, Philadelphia Fed President Patrick Harker mentioned, per Reuters, “The central bank is not done with raising its short-term rate target amid very high levels of inflation.”
Moving on, the RBI’s moves will be closely watched to determine near-term USD/INR performance. Also important will be the last dose of the Fed speakers’ comments before the blackout period preceding November’s Federal Open Market Committee (FOMC) meeting.
Technical analysis
A trend-widening formation called megaphone restricts USD/INR moves between 84.00 and 82.20.