USD/INR: Rupee gains but hits established resistance level

Key points

India’s Rupee was holding gains against the US Dollar on Thursday, but its advance was restrained by a well established level of resistance around 81.90.

The Rupee benefited from a drop in the US Dollar Index to as low as 102.007 on Thursday following Federal Reserve Chair Jerome Powell’s congressional testimony.

Powell indicated that further tightening was required to fight persistent inflation, a message that came as no surprise to markets.

“Powell’s speech offered little new information to traders, resulting in the selling of the dollar index,” and weighed on the USD/INR pair, Anindya Banerjee, head of research – FX and interest rates at Kotak Securities, was quoted as saying by Reuters.

As of 7:04 GMT on Thursday USD/INR was inching down 0.02% to trade at 81.9125. The exotic Forex pair has found solid support within the area between 81.8500 and 81.9300 over the past seven trading days.

Elsewhere, EUR/INR was down 0.02% on the day to trade at 89.9918, being not far from recent six-week high of 90.2002.

GBP/INR was last edging down 0.14% to trade at 104.4361 in anticipation of the outcome of the Bank of England’s policy meeting later in the day.

“A 25 bps hike and lack of hawkish communication should see GBP fall post-decision, while a 50 bps hike can perhaps see GBP overshoot to the upside,” OCBC Treasury Research wrote in a note to clients.