USD/INR Price News: Plunges from 76.00 as the RBI keeps interest rate unchanged at 4%

• USD/INR has tumbled sharply from 76.00 as the RBI has kept the repo rate unchanged at 4%.
• An accommodative stance is likely to shift to neutral going forward.
• The DXY is struggling to surpass the psychological figure of 100.00

The USD/INR pair has plunged from 76.00 as the Reserve Bank of India (RBI) has kept the repo rate unchanged at 4%while the reverse repo rate is elevated by 40 basis points to 3.75%. The decision of maintaining the status quo is in line with the estimates. The RBI has decided to take the bullet despite rising inflation due to higher oil prices and escalating geopolitical tensions in the European economy which carries the potential to derail the Indian economy from the path of growth.

This is the first monetary policy, which has conducted by the RBI on Friday after Russia’s invasion of Ukraine on February 24 and the financial year of 2022-23. The Monetary Policy Committee (MPC) has decided to remain accommodative for a while but is likely to turn to neutral amid higher inflation. The RBI has raised the inflation target to 5.7% for 2022-23 while the Gross Domestic Product (GDP) forecast has been reduced to 7.2% from the previous projection of 7.8%.

Meanwhile, the US dollar index (DXY) is struggling to tap the psychological figure of 100.00. Sometimes, a hard struggle near firmer resistance levels results in an intense sell-off, however, fundamentals are absolutely favoring the bulls. Therefore, the likes of an establishment above 100.00 are still sky-rocketing. The dictation of Federal Open Market Committee (FOMC) minutes released on Wednesday and cues from the Federal Reserve (Fed) policymakers on returning to neutral rates quickly are indicating that investors should brace for a tight liquidity environment this year. Also, the balance sheet reduction will start picking up soon.