Indian Rupee trades firmly, supported by potential aggressive intervention by the Reserve Bank of India (RBI). However, a rise in US Treasury yields and higher crude oil prices may limit the upside of the Indian Rupee. Investors will closely watch the RBI Forex swap maturity and US economic data. The INR posted modest gains on Monday, with the strengthening being bolstered by potential aggressive intervention by the RBI. However, the expectation that the Fed will hold rates ‘higher for longer’ has caused US Treasury yields to rise to multi-year highs. Additionally, a rise in oil prices may cap the upside of the INR. Traders will focus on a $5 billion RBI swap transaction set to mature on Monday, as well as the release of US economic data. Net foreign direct investment in India has fallen due to global activity slowdown and repatriation. The RBI Chief has stated that the central bank intervenes in the forex market to prevent excessive volatility of the INR. The Finance Minister will also consider the impact of tensions in the Middle East on the supply chain. The RBI’s October bulletin suggests that growth is expected to gain momentum throughout the year. Technical analysis shows that the INR is holding above a key support level, but a breach below could lead to a drop. The USD/INR pair is trading within a narrow range, with a key contention level at 83.00. The pair holds above the 100- and 200-day EMAs, indicating further upside potential. The heat map and table show the percentage changes of major currencies against the US Dollar in the last 7 days. Fluctuations in the USD demand from Indian importers can impact the INR, as well as the price of oil, inflation, interest rates, and trade deficits.
