USD/INR has repeatedly pushed toward 96.00 in recent sessions but keeps failing to hold above it, with Societe Generale pointing to visible Reserve Bank of India intervention as the reason. The pair closed at 95.96 on Thursday and was trading at 95.8125 on Friday, still well short of the 96.57 intraday peak it reached on the 24th of July, its highest level since June.
Societe Generale said the rupee’s inability to clear 96.00 is not a function of weak dollar demand but of direct central bank action in the FX market.
In India, USD/INR repeatedly tested 96.00 but failed to break higher as the RBI maintained a visible presence in the FX market via interventions.
Societe Generale
According to Societe Generale, that intervention is doing the work against a backdrop that would otherwise favour further rupee weakness. Higher oil prices and rising global bond yields have pushed India’s 10-year government bond yield to within a single basis point of its May high of 7.143%, a move that typically accompanies capital outflows and rupee pressure rather than stability.
Against that, the domestic policy tone has turned more constructive. RBI Deputy Governor Poonam Gupta struck an optimistic note, according to Societe Generale, suggesting the rupee could stabilise and potentially appreciate from current levels rather than extend its slide. Indian manufacturing and services PMIs have both moved higher, an encouraging signal on domestic activity that offers the currency some support of its own, even if it is a secondary factor next to the RBI’s market presence.
Societe Generale characterised the 96.00 area as a level being held by policy action rather than by free market flows alone, framing the RBI’s visible intervention — rather than dollar demand or the domestic backdrop — as the direct explanation for the rupee’s failure to clear it this week.
The post USD/INR Keeps Failing at 96.00 as RBI Intervention Caps the Rupee’s Slide first appeared on Forextraders.com.