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USD/INR: Rupee volatility hits lowest since August 2018

  • INR volatility hits lowest since August 2018. 
  • Dollar recovery likely as the market seems to have overpriced rate cuts. 

The Indian Rupee’s (INR) one-month ATM volatility fell to 5.125 on Tuesday, the lowest level since Aug. 9, 2018.  

Notably, the volatility gauge has dropped sharply from 9.275 to 13-month lows over the last four weeks. 

The USD/INR pair ended with 0.20% losses on Tuesday and is trapped in a falling wedge, as per the daily chart

A break above the wedge resistance, currently at 69.53 would create room for a rise to recent highs above 70.50. 

A breakout cannot be ruled out as markets have overpriced Fed rate cuts, as per Goldman Sachs and a broad-based US dollar could be seen if the upcoming US macro data better estimates. 

It is worth noting that the 10-year US Treasury yield is now seen at 2.14%, up 10 basis points from the multi-month low of 2.05% hit on June 7. 

INR's volatility

Author

Omkar Godbole

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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