Central bank will start policy tightening in March
|The USDINR pair made a gap up opening at 74.39 levels and traded in the range of 74.37-74.60 with an upside bias. The pair finally closed at 74.57 levels. The RBI set the reference rate at 74.4115. The USDINR pair rose today because state-owned and foreign banks persistently purchased the US dollar on behalf of oil marketing companies, noting elevated Brent crude oil prices. Prices of crude oil rose sharply and touched the $88-per-barrel mark as investors expected supply to remain tight amid restrained output by major producers with global demand unperturbed by the Omicron variant.
Crude oil prices also jumped after Yemen's Houthi group attacked storage facilities in the UAE, escalating tensions in the region and raising concerns over the supply. A slump in domestic equity indices also supported sentiment for the pair. The dollar index remained elevated globally following hawkish statements by senior Fed officials in recent weeks ahead of the Jan 25-26 FOMC meeting. While market participants do not expect an interest rate hike next week, they are anticipating that the central bank will start policy tightening in March.
The BoJ raised its inflation forecasts but said it was in no rush to change its ultra-loose monetary policy, as rising prices fan speculation it may soon signal a shift in its decade-old stimulus experiment. German investor sentiment surged in January on expectations that the incidence of COVID-19 cases will fall by early summer, allowing growth in Europe's largest economy to pick up in the coming six months.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.