- USD/INR drops for the third day, around two-week low.
- Three-year Treasury yields drop to the record low, market repo and interbank call rates are also down.
- US Dollar weakness favors the pair sellers, Thanksgiving Day can restrict the moves.
USD/INR drops to 73.77, down 0.06% intraday during the early Thursday. In doing so, the quote ignores the downbeat performance of Indian rates. The reason could be traced from the US dollar weakness.
Be it a three-month treasury bill or market repo, not to forget call rate and collateralized money-market rates, all the key short-term rates are down in India, as per the latest research from Bloomberg. The moves are “indicating investors such as mutual funds are accepting returns lower than what RBI’s deposit window would offer banks,” per the report.
The report cites liquidity bloat from the central bank’s intervention in the foreign currency market as a major challenge that stops Governor Shaktikanta Das from achieving his target.
Elsewhere, the US dollar index (DXY) wobbles around the lowest since September as downbeat economics and risk-on mood disappoint greenback buyers.
Looking forward, the Reserve Bank of India’s (RBI) monetary policy decision on December 04 will entertain the USD/INR traders. Before that risk catalysts can offer intermediate moves. However, Thursday is likely to be a dull affair for the pair considering the US holiday.
Technical analysis
A sustained downside past-50-day SMA and an ascending trend line from October 12 favor USD/INR sellers to attack the monthly low near 73.65.
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