USD/INR: RBI could step up intervention to at least mitigate rupee depreciation – Commerzbank

The Indian rupee came under pressure in the past month due to the spike in oil prices. High crude prices could have negative spillover effects on the economy, exert downside pressure on INR near-term. Therefore, the Reserve Bank of India (RBI) may step up intervention to alleaviete INR weakness

INR under pressure due to oil spike

“The oil price shock due to the Ukraine conflict is presenting RBI with a new set of challenges. The inflation picture is expected to worsen in the short term as input costs rise. The fiscal and current account deficits are also expected to be wider than earlier projections which could exert downside pressure on INR.”

“RBI still has to grapple with slowing growth momentum.”

“We expect RBI to maintain an accommodative stance near term. They could step up INR intervention in order to shore up confidence and not exacerbate the inflation picture.”