India: Softer CPI keeps RBI on hold – MUFG

💡 DMK Insight

India’s CPI inflation hitting 2.8% is a key signal for forex traders right now. Food prices are the main driver, and that could impact the Reserve Bank of India’s monetary policy. If inflation continues to rise, it might force the RBI to consider tightening measures sooner than expected, which would strengthen the Indian Rupee against major currencies. Traders should keep an eye on the USD/INR pair, especially if it approaches key support or resistance levels. A sustained rise in inflation could also ripple through to commodities, particularly agricultural products, affecting related markets. But here’s the flip side: if inflation stabilizes or declines, the RBI might maintain a more dovish stance, which could weaken the Rupee. So, watch for any upcoming RBI statements or economic data releases that could shift market sentiment. The next few weeks will be crucial for gauging the direction of the INR, especially as traders react to these inflation numbers.