The Indian Rupee (INR) traded flat at around 95.33 against the US Dollar (USD) in the opening session on Tuesday, as market participants shifted their focus to the upcoming Reserve Bank of India (RBI) monetary policy announcement scheduled for Wednesday [1]. Analysts at Commerzbank expect the RBI to maintain its current policy stance, with the benchmark repurchase rate likely to remain unchanged at 5.25% at the next meeting on August 5 [1]. This expectation is supported by the latest June CPI report, which showed inflation rising 4.4% year-over-year, remaining within the RBI's 2-6% target range, despite ongoing risks from higher global commodity prices and a weaker monsoon season [1].
Oil prices saw an uptick on Tuesday, with the MCX Crude Oil contract expiring on August 19 trading 1.3% higher near Rs. 7,745 in the opening session [1]. The rise in oil prices was attributed to uncertainty surrounding US-Iran negotiations and recent comments from US President Donald Trump regarding the reopening of the Strait of Hormuz [1]. Over the weekend, President Trump had shelved planned attacks on Iran after Tehran agreed to reopen the Strait and address nuclear conditions, which previously led to a significant plunge in oil prices [1]. Higher oil prices are generally negative for the Indian Rupee, given India's reliance on oil imports [1].
On the US front, the Dollar Index (DXY) remained strong near 100.00, with investors awaiting the US JOLTS Job Openings data for June, expected to show 7.45 million new jobs, slightly below May's 7.594 million [1]. The major event for the US Dollar this week is the Nonfarm Payrolls (NFP) data for July, due on Friday [1].
From a technical perspective, USD/INR continues to trade below the 20-day exponential moving average (EMA) at 95.7234, maintaining a bearish near-term bias. The Relative Strength Index (14) stands at 44.18, indicating slightly soft momentum and suggesting that upside for the pair remains capped [1].
CONCLUSION
The Indian Rupee remains stable as markets await the RBI's policy decision, with analysts widely expecting no change in rates due to contained inflation. Rising oil prices pose a risk to the Rupee, while technical indicators suggest limited upside for USD/INR in the near term. Market participants are also closely watching upcoming US economic data for further cues.