RBI Interventions Cap Indian Rupee's Losses Against USD
The Indian Rupee has been experiencing a tumultuous time against the US Dollar, but recent interventions by the Reserve Bank of India (RBI) have managed to cap losses and prevent further decline. The USD/INR pair repeatedly tested the 96.00 level but failed to break above it, indicating the RBI's efforts to stabilize the Rupee.
Deputy Governor Poonam Gupta expressed optimism about the Rupee's prospects, suggesting that it could not only stabilize but also potentially appreciate from its current levels. This sentiment is supported by encouraging domestic activity data, with both manufacturing and services PMIs moving higher.
However, the Rupee still faces challenges from higher oil prices and rising global yields, which have pushed the 10-year Indian Government Bond (IGB) yield near its May peak of 7.143%. This increase in local rates has put pressure on the Rupee, making it harder for it to appreciate against the US Dollar.