- USD/INR takes a U-turn from two-month high, pressured around daily low at the latest.
- India FinMin official expects V-shaped economic recovery, RBI may cite Omicron fears to avoid repo hike.
- India reports lowest daily infections since May 2020, total active cases dropped to June 2020 levels.
- Upbeat market sentiment weigh on US dollar amid light calendar.
USD/INR struggles to extend the bounce off intraday low around 75.30, down 0.08% on a day during early Tuesday morning in Asia.
The Indian rupee (INR) pair cheers mildly positive sentiment, as well as optimism at home, to pause two-day advances by reversing from October 13 high.
Among the positives, comments from Indian Finance Ministry (FinMin) official, cited by NewsRise, were the major ones to weigh on the USD/INR prices. The Indian diplomat said, “Economy has seen v-shaped recovery, key parameters showing strong rebound.” It’s worth noting that the Indian policymakers are bracing for the listing of the domestic bonds to the global indices and the same keeps the investors at home hopeful enough to favor INR.
Elsewhere, India’s daily coronavirus infections rose by the least since May 2020 while the total active infections slumped to the lowest since June 2020, per official data cited by NewsRise and shared via Reuters.
It should be noted, however, that the Reserve Bank of India (RBI) is likely to mark the South African covid variant, dubbed as Omicron to step back from an anticipated cut in the repo hike. “The Reserve Bank of India will likely hold off on raising its key borrowing and lending rates on Wednesday, as it adopts a cautious tone amid the spread of the Omicron coronavirus variant, economists and market participants said,” per Reuters.
Also weighing on the USD/INR prices is the People’s Bank of China’s (PBOC) measures to safeguard the world’s second-largest economy from the virus woes and Japans’ readiness for record stimulus.
On the other hand, an absence of notable virus-led deaths and expectations of finding a cure to the COVID-19 strain seems to keep the sentiment brighter.
Against this backdrop, the US Treasury yields and the Asia-Pacific stocks keep the week-start rebound but the US Dollar Index (DXY) struggles to pick up.
Moving on, a light calendar ahead of Friday’s US Consumer Price Index (CPI) may challenge USD/INR moves but Wednesday’s RBI meeting will be important to watch.
Technical analysis
A clear daily break of the 75.20 horizontal resistance, now support comprising highs marked during October-November, keeps USD/INR buyers hopeful to refresh the yearly top beyond 75.65.