Commerzbank analysts Charlie Lay and Dr. Henry Hao highlight resilient Indian industrial production in May, with broad-based strength across manufacturing and investment-related sectors. They note that lower Oil prices, stabilising foreign portfolio flows and policy measures to attract overseas capital have eased pressure on India’s balance of payments. As a result, they see USD/INR consolidating within defined ranges in the near term.

RBI-supported resilience and INR ranges

"The outlook for INR has also improved in recent weeks as lower crude oil prices, stabilising foreign portfolio flows, and recent policy measures to attract overseas capital have eased pressure on India's balance of payments."

"Foreign investors have continued to increase holdings of Indian government bonds following the government's tax incentives and expanded access to the bond market."

"The sharp decline in oil prices has reduced concerns over India's import bill and inflation outlook."

"Overall, the combination of resilient domestic activity, easing oil prices, and improving foreign capital inflows suggests downside risks to INR have moderated."

"USD/INR was slightly higher yesterday by 0.1% to 94.54. We look for consolidation in the near term between the 94-96 range and possibly to a lower trading range of 92-94 if oil prices drop further."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)