• USD/INR meets with a fresh supply on Thursday, though lacks follow-through.
• The RBI’s decision to maintain the status quo do little to provide any impetus.
• Traders keenly await the release of the latest US consumer inflation figures.

The USD/INR pair comes under some selling pressure during the Asian session on Thursday and move away from a more than six-month top, levels just above the 83.00 mark touched the previous day. Spot prices remain depressed around the 82.80-82.85 region and move little after the Reserve Bank of India (RBI) announced its policy decision.

As was widely anticipated, the Indian central bank decides to maintain the status quo and leave its key policy rate (repo rate) unchanged at 6.50% for the third time in a row. The Indian Rupee (INR), meanwhile, draws some support from an increase in the RBI’s average inflation forecast for the financial year (FY) 2024 to 5.40% from the 5.1% estimated previously.

Adding to this, RBI Governor Shaktikanta Das said that the economy is showing enhanced strength and has made significant progress towards controlling inflation. Das, however, raises concerns about the recent spike in vegetable price inflation, though expects it to reverse quickly and sees inflation easing back to 5.2% in Q1 of FY25.

This, along with subdued US Dollar (USD) price action, exerts some pressure on the USD/INR pair. That said, the downside remains cushioned as traders seem reluctant to place aggressive bets ahead of the US consumer inflation figures, due for release later during the early North American session. The crucial US CPI report will influence expectations about the Fed’s future rate-hike path, which, in turn, will drive the USD demand and provide a fresh directional impetus to the pair.