Mr. Sriram Iyer, Senior Research Analyst - Currency & Commodity at Reliance Securities on RBI MPC.
RBI Policy Analysis: The Rupee appreciated after RBI raised the repo rate by 50 basis points to 5.90% from 5.40% and 5 members out of 6 voted for 50 bps.
Decision widely expected and no negative surprises has supported the Rupee and stock markets strength after the announcement.
With regards to the policy, the RBI governor said that persistent high inflation needs further withdrawal of accommodation.
However, he added that consumer price-based inflation remains elevated and possible will remain sticky and we believe that persistence of high inflation could necessitate further policy changes in the future.
RBI has projected CPI Inflation at 7.1% in Q2, 6.5% in Q3 and 5.8% in Q4 of FY 2023.
However, appreciation bias could be limited fight as the Fed will continue to hike another 125 bps till the end of the year as the central bank continues to press ahead to cool stubbornly high inflation.
Moreover, domestic inflation will continue to remain sticky, which will prompt the central bank to remain hawkish on rates with the final terminal rate close to 6.50% to 6.75% till FY23.
So, support for the USDINR spot pair is 81.20 to 80.80, while resistance is at 82.00 levels.