USD/INR Dynamics: RBI Caution, US PMI Awaited Amidst Global Factors


January 23, 2023

New Delhi, India

Indian Rupee Softens Despite Global Economic Landscape

Indian Rupee (INR) faced softening trends against the US Dollar (USD) despite a slight dip in the US Dollar Index. The Reserve Bank of India (RBI) remains cautious, emphasizing that a key policy rate cut would be premature until a sustained 4% inflation target is achieved.

RBI’s Stance on Key Policy Rate

RBI Governor Shaktikanta Das, in a recent statement, acknowledged a positive decline in the Indian Consumer Price Index (CPI) inflation, reaching the RBI’s target range of 2–6%. However, Das highlighted emerging geopolitical concerns and the impact of climate change on food prices as potential risk factors.

Market Sentiments and US PMI Anticipation

Investors are closely monitoring the upcoming US Purchasing Managers’ Index (PMI) report, particularly the preliminary S&P Global Services PMI for January. Expectations suggest a slight easing, with attention also directed towards the Q4 US Gross Domestic Product Annualized and December Core Personal Consumption Expenditures Price Index (Core PCE).

Shifting Market Expectations

Market dynamics indicate a shift in expectations, with odds for a rate cut at the March meeting dropping from 70% to 42%. San Francisco Fed President Mary Daly urges caution, emphasizing that more work is needed to bring inflation down to the 2% target.

India’s Economic Indicators and Technical Analysis

According to recent data from the Reserve Bank of India (RBI), India’s foreign currency reserves increased, reaching USD 618.937 billion. Foreign Direct Investment (FDI) has surged from $36 billion in 2014 to $70.9 billion in 2023.

Technical Analysis: USD/INR Trading Range

Technically, the USD/INR pair remains range-bound between 82.80 and 83.40. While currently holding above the key 100-period Exponential Moving Average (EMA), the 14-day Relative Strength Index (RSI) below the 50.0 midline suggests vulnerability to additional declines.

Key Levels and Outlook

Critical levels to watch include resistance at 83.40, with additional barriers at the 2023 high of 83.47 and the round figure of 84.00. On the downside, support is noted at the psychological mark of 83.00, potentially exposing 82.80 and 82.60 in case of further selling.


The USD/INR landscape reflects a delicate balance influenced by RBI caution, global economic factors, and technical signals. As markets await the US PMI report, investors keep a close eye on evolving dynamics that could shape the currency pair’s future trajectory.

Also Check: Rupee vs Major Currencies


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