USD/INR Holds Steady Amid Rising U.S. Yields, Fed Rate Cut Bets

The Indian rupee (INR) remained flat on Tuesday despite a stronger US dollar (USD). Rising US bond yields and lower bets on a rate cut by the Federal Reserve (Fed) after stronger-than-expected US jobs data temporarily boosted the dollar. However, falling crude oil prices and easing political uncertainty over India’s general elections are likely to support the INR and limit the upside for the currency pair. Also, the Reserve Bank of India (RBI) is likely to intervene in the market to prevent the INR from depreciating.

Market participants will be closely watching India’s Consumer Price Index (CPI) to be released on Wednesday. In the US, the May CPI will be released before the Fed’s rate decision. After the Fed meeting, the US central bank will update the Summary of Economic Projections (SEP). Any hawkish message from Fed officials is likely to boost the dollar against its rival currencies.

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