Commerzbank: RBI Interventions to Keep USD/INR Range-Bound

Key Facts

A recent report from Commerzbank suggests that the USD/INR pair is expected to remain range-bound, supported by the Reserve Bank of India’s (RBI) active presence as a market anchor. In a significant escalation of its intervention strategy, the RBI has recently restricted oil refiners from purchasing US dollars in the spot market to alleviate pressure on the Rupee. Following these new restrictions, the USD/INR pair opened lower, reflecting the immediate impact of the central bank's regulatory curbs. These actions complement previous measures noted by OCBC to limit speculative long positions and prevent sharp currency depreciation. Analysts believe that targeting dollar demand from refiners creates additional room for the pair to move lower in the near term. Consequently, the RBI's consistent and targeted actions continue to dampen price fluctuations more effectively than its emerging market peers.

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