USD/INR Outlook:
The USD/INR is slightly positive but likely to move sideways as it trades near 14-day highs, just above its recent average. This is consistent with forecasts from HSBC, which anticipates INR stability due to strong growth and RBI intervention.
Key drivers:
• Rate gap: The US Federal Reserve's cautious stance contrasts with the Reserve Bank of India's continued growth focus, supporting the USD.
• Risk/commodities: Geopolitical uncertainty is bolstering demand for the USD as a safe haven, while fluctuations in oil prices could influence the INR further.
• One macro factor: Recent US jobless claims rise, lower than expected, that suggests a labor market maintaining strength, which supports the USD.
Range:
The pair is expected to drift within its recent 3-month range of 89.35 to 92.05.
What could change it:
• Upside risk: A significant drop in inflation from the upcoming US producer price index could boost USD further.
• Downside risk: An unexpected spike in oil prices might weaken the INR against the USD.