USD/INR Price News: Tumbles to near 76.10, Fed’s policy burdens DXY, RBI hikes rates overnight

• USD/INR has slipped below its eight-day low at 76.20 as DXY weakens.
• The synergy of rate hikes and quantitative easing may control the soaring inflation.
• The RBI has raised its repo rate by 40 bps and CRR by 50 bps overnight.

The USD/INR pair has witnessed heavy selling pressure at open and has continued its two-day losing streak as hawkish Federal Reserve (Fed) policy has cornered the greenback. A similar open-high structure at open is denoting a bearish open-drive session to take place in today’s session.

An aggressive hawkish monetary policy by the Fed has underpinned the positive market sentiment. If someone will consider the announcements, the rate hike by 50 basis points (bps) and the sheer pace for balance sheet reduction was already discounted by the market participants. Therefore, a rebound in the risk-perceived assets was highly likely. To contract liquidity from the economy, the Fed will reduce its whooping balance sheet with $95 billion worth of assets on monthly basis. This may synergy with the rate hike measures to leash the soaring inflation. The policy announcement has weighed tremendous pressure on the US dollar index (DXY). The DXY has tumbled to near 102.50.

On the Indian rupee front, the Reserve Bank of India (RBI) has raised its repo rate for the first time in the last four years. The RBI has elevated the borrowing rates by 40 bps to 4.4%. It is interesting to note that the RBI has stepped up its repo rate with immediate effect after an emergency meeting. While the Cash Reserve Ratio (CRR) is increased by 50 bps. The decision has been taken to ensure that inflation should remain n the target range. Higher crude and commodity prices are hurting the real income of households to curtail the roaring inflation, quantitative need to be tightened.