Indian Rupee: US Dollar range intact as RBI maintains hawkish stance – Commerzbank

94–97 remains the six-month trading range for USD/INR. Commerzbank strategists Dr. Henry Hao and Charlie Lay say the pair edged higher but remains comfortably within that band. Resilient Indian industrial production and the Reserve Bank of India’s (RBI) hawkish stance provide support, they note. However, elevated oil prices remain a near-term headwind for the Indian Rupee (INR).

Indian Rupee support tempered by oil headwinds

"September industrial production growth moderated to 6.7% yoy (Bloomberg consensus: 7.2%) from a downwardly revised 7.8% in August. Manufacturing output growth eased to 7.6% from 8.6% previously, while electricity and gas production slowed to 11.2% from 12.3%."

"Overall, the September data suggest a moderation rather than a significant loss of industrial momentum. This is consistent with the October flash PMI which pointed to a continued expansion in manufacturing. The strength in capital and intermediate goods output points to sustained investment-related demand, although weaker consumer durables growth and subdued non-durables production suggest a less uniform recovery in household demand."

"The data remain broadly consistent with RBI’s FY2026-27 GDP growth forecast of 7.1%. The latest Bloomberg survey shows economists now expect the repo rate to reach 5.75% by end-2026 and 6.00% in Q1 2027, compared with a previous peak expectation of 5.75%. This implies a further 25bp hike by year-end and another in Q1 2027."

"USD/INR rose 0.1% to 95.23, remaining comfortably within the 94-97 range over the past six months. A hawkish RBI and resilient domestic growth remain supportive factors, but elevated oil prices are a key near-term headwind."

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