- USD/INR extends early-Asian losses to 73.69 after RBI’s inaction.
- RBI kept Repo, Reverse Repo intact while upwardly revisiting FY21 GDP and inflation forecasts.
USD/INR drops to 73.69, down 0.15% intraday, during the pre-European session trading on Friday. The pair recently slipped around 10-basis points on the Reserve Bank of India’s (RBI) Interest Rate Decision.
The RBI matched most expectations of keeping the headline Repo rate unchanged at 4.0%, while also holding the Reverse Report intact at 3.35%. However, Indian rupee (INR) bulls were mostly pleased by the upbeat economic projections from Governor Shaktikanta Das.
The RBI chief said that inflation is likely to remain elevated while announcing the decision to continue with an accommodative stance this year and the next. Mr. Das also said, “recovery signs are far from broad-based.”
RBI Governor Das also upwardly revised the Fiscal Year (FY 2021) GDP forecast from -9.5% to -7.5% while saying, “On-tap TLTRO (targeted long-term repo operation) now extended for more stressed sectors.” The central banker also mentioned that the focus has turned to provide further support measures.
Having seen the initial reaction to the RBI, USD/INR traders will keep their eyes on the US employment data for November for fresh impulse. Considering the likely impact of the coronavirus (COVID-19) resurgence, the US dollar may witness additional downside following the release of the jobs report.
Read: US Nonfarm Payrolls November Preview: Orders now, hiring to come
Technical analysis
The odds of the pair’s drop to the monthly low near 73.40 can’t be ruled out unless the USD/INR buyers manage to cross the confluence of 10-day and 50-day SMA near 73.85/90.
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