USD/INR Price News: Consolidates above 82.60 as investors await Fed policy for fresh impetus
|- USD/INR is oscillating in a narrow range above 82.60 ahead of Fed policy.
- Deepening odds of a smaller interest rate hike by the Fed are also weighing on the return offered on US bonds.
- Capital inflows in India could be trimmed if the banking turmoil stretches further.
The USD/INR pair is displaying a back-and-forth action around 82.60 in the Asian session. The asset is demonstrating a lackluster performance following the sideways cues observed from the US Dollar Index (DXY) observed on Tuesday. The major is expected to continue to consolidate in a narrow range as investors are focusing on the announcement of the monetary policy by the Federal Reserve (Fed).
S&P500 futures look quiet after a two-day winning streak as fears of further shakedown in the United States banking sector have started fading, portraying a risk appetite theme underpinned by the market participants. The US Dollar Index (DXY) has slipped below the intermediate support of 103.20 and is expected to remain on tenterhooks ahead of the interest rate decision by the Fed.
Deepening expectations of a smaller interest rate hike by the Fed are also weighing on the return offered on US Treasury bonds. The 10-year US Treasury yields have trimmed to near 3.58%.
Analysts at CitiBank expect a 25 bps rate hike to take the Fed Funds rate to 4.75-5.0%. Fed chair Jerome Powell is likely to emphasize inflation can be addressed through policy rates, while financial stability can be addressed through other tools. No hike might be interpreted as the Fed is aware of more problems in the banking sector than the public.
On the interest rate guidance, CitiBank expects the median dot for year-end 2023 to rise 25 bps from 5.00-5.25 to 5.25-5.5% and the 2024 dot to rise 25 bps. Fed will also update its quarterly economic forecasts.”
Meanwhile, Indian Rupee is working hard to defend the downside on an argument that the US banking sector crisis would have a negligible impact on the Indian economy.
The State of the Economy report from the Reserve Bank of India (RBI) claims that the direct impact of the US banking crisis on India’s economic activity could be limited. Capital inflows due to global volatility could be trimmed if banking turmoil stretches further.
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.