INR: New CPI series and RBI stance – Commerzbank

💡 DMK Insight

India’s January inflation hitting 2.8% is a game-changer for traders focused on the RBI’s monetary policy. With inflation now comfortably within the Reserve Bank of India’s (RBI) target band of 2-6%, we might see a shift in interest rate expectations. This could lead to a more stable environment for the Indian rupee, which has been under pressure from global economic uncertainties. A reweighted CPI basket that reduces food’s share should help dampen volatility, making it a prime time for forex traders to reassess their positions. If the rupee strengthens, it could impact related assets like Indian equities and bonds, which often react positively to lower inflation. But here’s the flip side: if global inflation pressures rise or if the RBI decides to tighten policy too aggressively, we could see a quick reversal. Traders should keep an eye on upcoming RBI meetings and any statements regarding future rate hikes. Watch for key levels around the 82 mark for USD/INR, as a break below could signal further rupee strength.