RBI defies the Dollar: Indian Rupee maintains stability

The Indian rupee is under pressure due to rising U.S. Treasury yields and a strengthening dollar. It is expected that the U.S. Federal Reserve might make a smaller interest rate cut at its upcoming meeting in November. The one-month forward contract indicates that the rupee will open little changed, after it last traded at 83.9625. This week, it moved within a narrow range and largely remained above the 84 mark, thanks to support from the Reserve Bank of India (RBI). A foreign exchange trader from a bank commented that the RBI is determined to prevent a drop below the 84 mark. As long as the RBI keeps this in mind, experts recommend using small price dips and recoveries for trading. This stability of the rupee is considered remarkable by many, even if it is not surprising, noted a treasury expert from a bank. The support from the RBI has helped the currency withstand challenges from capital outflows in the stock sector, fluctuations in oil prices, and a strong dollar. The dollar index is near its highest level in almost two months, fueled by speculation about a possibly smaller rate cut by the Fed. Investors have abandoned the expectation of a repeat of the 50 basis points rate cut from September, due to a robust U.S. jobs report. The minutes of the Fed's September meeting suggested that some policymakers considered a smaller rate cut of 25 basis points to be more appropriate. U.S. yields rose on Wednesday, with the 10-year bond at its highest level since the end of July. The market is now focusing on the upcoming U.S. consumer inflation data. Chris Weston, an expert from Pepperstone, noted that a rise in inflation data could dampen expectations of a rate cut in November.