Indian Rupee: RBI support offsets wider trade gap – Societe Generale

Societe Generale notes India’s headline CPI rose slightly to 4.45% year-on-year in July, backing the RBI’s decision to keep policy unchanged. The central bank has reportedly been active in FX markets as the trade deficit widened. Higher Oil and Gold prices countered dovish Federal Reserve repricing, while non-resident inflows into Indian Government Bonds have helped support the Rupee.

RBI activity and bond inflows aid rupee

"India headline CPI edged up modestly to 4.45% yoy in July from 4.38% in June, reinforcing the latest decision by the RBI to keep policy on hold."

"At the same time, the central bank has reportedly remained active in FX markets as the trade deficit widened to $31.98bn in July from $30.4bn the previous month."

"The rebound in both oil and gold prices offset the dovish repricing of Fed policy expectations."

"Non-resident investors have ploughed $2.5bn into IGB securities so far in August, helping to support the INR. "

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)