USD/INR remains under pressure despite rebounding capital flows, with crude prices lifting bond yields and fiscal risks.
The Indian Rupee (INR) is trading near recent lows against the US Dollar (USD), constrained by rising oil prices and a firm greenback. Higher crude costs have pushed USD/INR higher and lifted long-end bond yields, while authorities warn of fiscal and current account pressures.
Portfolio inflows and swap-window funding have improved, but the INR has depreciated 1.1% this month and 6% year-to-date. Central bank intervention has prevented a sharper decline, though expectations of US policy tightening limit upside.
A brief dollar pullback on Friday provided temporary support for Asian currencies, but the rupee is expected to remain rangebound, with 95.00 seen as a floor.