- Indian Rupee (INR) rises after RBI meeting on Friday
- RBI looking to a more neutral monetary policy
- US Dollar (USD) rises versus major peers for a 9th day
- US Fed speakers in focus
The US Dollar Indian Rupee (USD/INR) exchange rate is edging lower on Monday after booking small losses across last week. The pair shed 0.05% last week, settling on Friday at 75.93. At 10:00 UTC, USD/INR trades -0.06% at 75.89.
The Rupee strengthened last week after The Reserve Bank of India indicated that it was starting to move away from its ultra-loose monetary policy, even as it kept interest rates at a record low level. The central bank highlighted that its priorities were changing towards reining in surging inflation amid the fallout from the Russia Ukraine war.
The RBI said that it would restore its liquidity adjustment facility corridor to pre-pandemic levels in a move that surprised the markets. This is considered to be the first move away from the emergency measures applied as the pandemic hit the country and its economy.
The general expectation is that the RBI will now move towards a more neutral monetary policy.
The US Dollar is falling versus the Rupee but is holding steady versus its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades at +0.0% at the time of writing at 98.80 after jumping 1.1% across last week.
The US Dollar rallied last week after the minutes of the latest Fed meeting showed that the Federal Reserve was looking to adopt a more aggressive path to monetary policy normalization. Expectations of a 50 basis point rate hike in May have ramped up, and the Fed also intends to trim its balance sheet rapidly.
St Louis Fed President James Bullard, renowned for his hawkish stance, said that the central bank needs to raise interest rates by another 3% before the end of the year.
Today there is no high impacting US economic data. Instead, several Fed officials will be speaking. More hawkish rhetoric could send the US Dollar higher back towards 100.00 and two-year highs.
