RBI Intervention Fuels Rupee Surge Amid Oil Price Woes
The US dollar surged to new highs after the NFP report showed job growth in August tripled expectations, but its gains were short-lived as market attention shifted to inflation data. The Federal Reserve is focused on keeping interest rates unchanged at the upcoming FOMC meeting, but a hot CPI reading could lead to a rate hike.
The Indian Rupee has detached from reality in recent days, rallying despite rising oil prices and a stable US dollar. This may be due to the RBI's increased intervention, with bankers citing three strong spikes without any positive catalyst for the rupee.
Traders expect dip-buyers in the USD/INR pair to step in soon as intervention gains are typically short-lived without a change in fundamentals. However, a negative US CPI reading on Friday could weaken the dollar across the board.