USD/INR Price News: Indian rupee pierces off 75.00 on RBI’s inaction, US inflation eyed

• USD/INR crosses short-term key hurdle during three-day run-up, refresh two-week top.
• RBI keeps policy rates unchanged, cites supply constraints.
• Market sentiment remains sluggish as traders await US CPI for January amid mixed concerns over March rate hikes.

USD/INR takes the bids to refresh fortnight high around 75.01, up 0.33% intraday following the RBI inaction on early Thursday. In doing so, the Indian rupee (INR) pair also justifies the market’s risk-off mood ahead of the key US Consumer Price Index (CPI) data for January.

The Reserve Bank of India (RBI) keeps the benchmark interest rate (Repo) unchanged at 4.0% while also holding the Reverse Repo Rate intact at 3.55% at the end of the latest monetary policy meeting.

While conveying the monetary policy decisions, RBI Governor Shaktikanta Das quotes the International Monetary Fund (IMF) statement suggesting that India is poised to grow at the fastest pace among global economies. The RBI Chief also said, “Supply chain disruptions persist.”

“Headline inflation expected to peak in Q4, real GDP growth projected at 7.8% for 2022/23,” adds RBI’s Das.

Other than the RBI verdict and fears of inflation, the sour sentiment in the market also propels USD/INR prices.

Risk appetite remains weak amid fears over the Fed’s next move in March, considering the hot inflation and supply chain disruptions. On Wednesday, the White House (WH) conveyed expectations of a higher YoY inflation figure while also saying, “Its irrelevant month on month number will continue trending lower the rest of the year.” Following that, WH Economic Adviser Brian Deese said that he sees reason to think that factors boosting inflation will moderate over time.

Additionally, Cleveland Fed President Loretta Mester supported the March rate hike while Atlanta Federal Reserve President Raphael Bostic told CNBC on Wednesday he is hopeful that they will start to see a decline in inflation. Fed’s Bostic also said, "Leaning toward the need for a fourth interest rate increase in 2022."

Looking forward, USD/INR moves are likely to rely on the US inflation data for January, expected 7.3% YoY versus 7.3% prior. Given the higher hopes, any disappointment can easily pull back the pair prices.

Read: US Inflation Preview: Core CPI above 6% could spark next dollar rally

Technical analysis

A daily closing beyond the convergence of the two-month-old descending trend line and 50-DMA, near 74.90, becomes necessary for the USD/INR bulls to keep reins. However, the pair bears need to conquer the 21-DMA level of 74.65 to retake control.

Meanwhile, USD/INR bulls need validation from the 75.00 threshold, even after crossing the 74.90 hurdle, to aim for January’s peak of 75.35.