Rupee steadies below record as traders brace for RBI decision; USD/INR holds near 90
The Indian rupee edged off its all-time low against the dollar on Friday, with USD/INR opening around 89.84 as markets positioned for the Reserve Bank of India’s policy decision. Traders expect a tight range until the central bank clarifies its stance on rates, liquidity and the currency’s recent slide.
RBI in focus: Rates, liquidity and currency guidance
A divided market heads into the RBI’s announcement at 10:30 a.m. IST (0430 GMT; 2330 ET), followed by a press briefing two hours later. While expectations for an immediate cut have faded after stronger-than-expected GDP data, demand for a dovish tone or liquidity support remains high. Any explicit acknowledgment of rupee weakness and guidance on intervention or liquidity operations could be the key swing factors for USD/INR direction.
Range-bound trade ahead of the decision
Dealers expect consolidation within 89.80–90.20 near term, with risk skewed toward a retest of the 90.00 handle if the RBI signals easing or tolerance for further currency weakness. A more hawkish stance or firm defense of the currency could nudge the pair lower within that band.
Bonds firmer, equities positive as dovish hopes build
Indian government bonds opened stronger, with the benchmark 10-year yield slipping to 6.515% from 6.527%, reflecting bets that the RBI might lean dovish in tone even if policy rates are left unchanged. Equities opened constructive, with the Nifty 50 turning positive, suggesting broader risk appetite remains intact.
Global FX backdrop
The rupee’s move comes amid a still-firm dollar and patchy risk sentiment across Asia, where higher-for-longer U.S. rate expectations and uneven global growth have kept emerging-market FX on the defensive. For FX desks, the RBI’s signal on managing volatility—versus defending specific levels—will help set near-term direction, BPayNews notes.
Market snapshot
- USD/INR opened near 89.84 after touching a record high of 90.42 on Thursday.
- Near-term consolidation eyed in a 89.80–90.20 range ahead of the policy decision.
- RBI decision due at 10:30 a.m. IST; press conference two hours later.
- India 10-year bond yield eased to 6.515% from 6.527%.
- Nifty 50 turned positive in early trade.
- Markets split on a rate cut; traders watching for dovish commentary and liquidity cues.
What to watch next
– RBI stance on inflation-growth balance and any hints on the timing of future easing.
– Language on rupee weakness and approach to FX volatility management.
– Liquidity measures (OMO operations or other tools) that could influence short-term rates.
– Reaction in USD/INR around the 90.00 level, where options and stop orders may cluster.
FAQ
Why did USD/INR back off its record high today?
Positioning ahead of the RBI decision prompted some profit-taking after Thursday’s record high. Traders expect the central bank’s guidance on rates, liquidity and FX management to determine whether USD/INR sustains above 90 or consolidates below it.
Would an RBI rate cut push the rupee weaker?
A surprise cut could weigh on the rupee by widening rate differentials and encouraging outflows, potentially sending USD/INR back toward the 90.00 handle. However, any simultaneous signal of active FX management or liquidity support could temper the move.
What would support the rupee from here?
Firm guidance on containing FX volatility, tighter liquidity conditions that lift short-end rates, and a stronger emphasis on inflation control would all be supportive. Constructive risk sentiment and lower oil prices would also help.
What are the key USD/INR levels to watch?
Near term, 89.80 is seen as initial support and 90.20 as resistance. The 90.00 round figure remains a psychologically important pivot where options-related flows can amplify moves.
How are Indian bonds and stocks reacting?
Bond yields have edged lower on hopes of a dovish lean, while the Nifty 50 turned positive, indicating steady risk appetite. A hawkish surprise would likely see yields rise and could cool equity gains.
