The USD/INR price is little changed ahead of tomorrow’s Reserve Bank of India (RBI) interest rate decision. The Indian rupee is trading at 73.38 against the US dollar, which is 1.5% above the lowest level in March.
RBI interest rate preview
The RBI monetary policy committee started its two-day meeting today as the country faces significant challenges because of the pandemic. The bank will unveil its interest rate decision tomorrow. Because of the current economic challenges, most analysts believe that the bank will leave the headline rate unchanged at 4%.
The market will be watching for the bank’s guidance even as inflation rises. In its recent decision, the bank predicted that the economy will expand by 10.5% after contracting by 7.7% in the previous year. The bank could downgrade this forecast in this week’s meeting. Analysts expect that the CPI will rise by 5% in the second quarter.
The daily chart shows that the USD/INR price has been in an overall downward trend since April last year. It has fallen by more than 5% since this period. Along the way, it has formed a descending channel that is shown in black. And last week, it moved above the upper side of the channel. It has also moved above the 25-day and 15-day exponential moving averages while the RSI is at 60.
The pair may keep rising as bulls anticipate a relatively dovish RBI decision. However, a drop below 62.20 will invalidate this trend.