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INR: USD/INR Extends Post-Election Rally, Continued RBI Intervention Likely

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USDINR extended an additional leg higher during Thursday trade, bringing the pair’s gains to ~0.3% over the past 2 sessions. Election-related volatility and the potential of a further surge in US yields/USD would likely keep regional FX under pressure, with a number of officials from Asian central banks expressing readiness to limit undue currency volatility (see RBI comments above).

  • While Reuters report that traders are expecting the central bank to continue intervening to prevent sharp moves in the rupee, local economists who spoke to Bloomberg say they are unlikely to defend a specific level too heavily. The RBI regularly intervenes to bolster the currency, with recent intervention apparent in muted INR vols relative to its EM peers.
  • In the run-up to the election, Trump vowed to take reciprocal action against countries for imposing high tariffs on American goods. Last month, he accused India specifically of being the “biggest charger” of tariffs.
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USDINR extended an additional leg higher during Thursday trade, bringing the pair’s gains to ~0.3% over the past 2 sessions. Election-related volatility and the potential of a further surge in US yields/USD would likely keep regional FX under pressure, with a number of officials from Asian central banks expressing readiness to limit undue currency volatility (see RBI comments above).

  • While Reuters report that traders are expecting the central bank to continue intervening to prevent sharp moves in the rupee, local economists who spoke to Bloomberg say they are unlikely to defend a specific level too heavily. The RBI regularly intervenes to bolster the currency, with recent intervention apparent in muted INR vols relative to its EM peers.
  • In the run-up to the election, Trump vowed to take reciprocal action against countries for imposing high tariffs on American goods. Last month, he accused India specifically of being the “biggest charger” of tariffs.