USD/INR Price News: Indian rupee refreshes two-month top below 73.50 as RBI backs 4% inflation target
- USD/INR stays heavy near the lowest since October 21.
- RBI’s working paper proposes medium-term inflation target at 4% ahead of five-year review of the goal in March.
- Broad US dollar weakness on the house passage of the covid aid paycheck also favors the bears.
USD/INR remains on the back foot near 73.40, down 0.17% intraday, during the initial Indian trading on Tuesday. The pair recently dropped after the Reserve Bank of India’s (RBI) working paper triggered cautious optimism despite challenges due to the coronavirus (COVID-19) conditions at home.
“Retail inflation has stayed around 7% over the last three months, as the government pumped money into the system to revive Asia's third-biggest economy from the impact of the coronavirus crisis. High food prices have also contributed to the rise, limiting the space for the Reserve Bank of India (RBI) to further ease its monetary policy,” said Reuters in the news.
The policymakers comprising researcher Harendra Kumar Behera and Deputy Governor Michael Patra cited the country’s long-term inflation rate’s weakness towards 4.1-4.3% while suggesting to stick the 4.0% inflation target by saying, "if it ain’t broke, don’t fix it".
On the other hand, the US House passed a $2,000 covid paycheck amount, signed yesterday by US President Donald Trump. However, the bill needs the Senate’s approval to become law, where Republicans are likely to block the stimulus.
Even so, risk-tone remains upbeat during Asia. While portraying the mood, S&P 500 Futures refresh record high whereas the US 10-year Treasury yields rise to 0.94% by press time.
Looking forward, a lack of major data/events may restrict market moves ahead of the North American session where the Congress is up for voting on the much-awaited aid package. Should policymakers manage to overcome the differences and pass the stimulus smoothly, the US dollar may have a further downside, which in turn can favor USD/INR sellers.
Technical analysis
An ascending trend line from September 01, at 73.35, precedes the 73.00 round-figure that currently lures USD/INR sellers.