USD/INR: RBI shows clear preference for higher levels – Credit Suisse
|In India, a hawkish dissent at the 6 August Reserve Bank of India (RBI) meeting was a surprise for investors. However, economists at Credit Suisse think the RBI will prioritize growth over inflation in the near-term. Although India’s economic data have been improving, the RBI shows clear preference for a higher USD/INR.
RBI surprises with hawkish dissent, but change in stance unlikely in 2021
“RBI left policy rates unchanged. However, there was a surprise dissenting vote, with one MPC member of six (Jayanth Varma) expressing reservations about the committee’s decision to continue its accommodative stance. We think this dissenting view is unlikely to sway the rest of the RBI committee for the remainder of 2021.”
“We think the governor’s strong choice of words defending the RBI’s dovish stance, conveys the thinking of the rest of the MPC. Even though India’s economic activity is improving as the daily new number of Delta variant cases falls, we do not expect a change in stance until February 2022 at the earliest. The dissent does show, however, that some MPC members (although only a minority), are looking ahead to policy normalization.”
“The RBI continues to intervene in currency markets to limit rupee appreciation. Although India’s economic data have been improving, the RBI shows clear preference for a higher USD/INR.”
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.