USD/INR Price News: Indian rupee flirts with 73.00 as RBI's policymaker sounds cautiously optimistic
- USD/INR consolidates recent gains inside a choppy range near three-month low.
- RBI MPC member Varma said economy on track to pre-pandemic level, cites inflation risk.
- Covid woes, off in the US and a light calendar underpin USD rebound.
USD/INR defends 73.00 level, up 0.05% intraday as European traders brace for Monday. In doing so, the Indian rupee (INR) pair holds lower ground near a three-month low, marked last week, amid mild risk-on mood and mixed comments from the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) member Jayanth Varma.
In an interview with NewsRise, RBI’s Varma said, “Another quarter or so, we should have a very large segment of the economy past pre-pandemic levels. And given the somewhat light impact of the second wave (on the economy), I would expect even a third wave will not derail that.” Added the RBI MPC member, “As far as the economy is concerned, the pandemic is over,” per Reuters while quoting NewsRise.
The policymaker also mentioned, per the news, “I do not worry that inflation will go too high. I worry that inflation will remain moderately elevated for too long.” RBI’s Varma also gives details, per Reuters, “Getting inflation down from 5% to 4% will prove harder than we would like. And that has been the substance of my dissent as well. Given that there are large errors in forecast, there are errors in implementation, there are a lot of shocks that are going to come - given all of that, we need to target 4% to be fairly confident that we remain between 2% and 6%.”
Elsewhere, an absence of the US and Canadian traders join sluggish economic calendar and the coronavirus woes to weigh on the market sentiment, underpinning the USD strength. It’s worth noting that the cautious mood ahead of crucial central bank meetings and important data scheduled during the week also allows USD/INR buyers to consolidate the recent losses.
It should be noted that the US stock futures print mild losses by the press time whereas the stocks in Asia–Pacific trade mixed and back the US Dollar Index (DXY) to consolidate recent losses.
Considering a sluggish start to the key week, USD/INR may pare losses in the short-term but the pair buyers are less likely to retake controls.
Technical analysis
Oversold RSI conditions hint at corrective pullback but 61.8% Fibonacci retracement of February–April upside and 200-DMA, respectively near 73.50 and 73.60 should challenge the USD/INR bulls.