Commerzbank strategists Dr. Henry Hao and Charlie Lay note that USD/INR rose slightly but continues to trade comfortably within the 94–97 range seen over the past six months. They highlight resilient Indian industrial production and a hawkish Reserve Bank of India (RBI) stance, while warning that elevated Oil prices remain a near-term headwind for the Indian Rupee (INR).

Rupee supported but Oil weighs

“September industrial production growth moderated to 6.7% yoy (Bloomberg consensus: 7.2%) from a downwardly revised 7.8% in August. Manufacturing output growth eased to 7.6% from 8.6% previously, while electricity and gas production slowed to 11.2% from 12.3%.”

“Overall, the September data suggest a moderation rather than a significant loss of industrial momentum. This is consistent with the October flash PMI which pointed to a continued expansion in manufacturing. The strength in capital and intermediate goods output points to sustained investment-related demand, although weaker consumer durables growth and subdued non-durables production suggest a less uniform recovery in household demand.”

“The data remain broadly consistent with RBI’s FY2026-27 GDP growth forecast of 7.1%. The latest Bloomberg survey shows economists now expect the repo rate to reach 5.75% by end-2026 and 6.00% in Q1 2027, compared with a previous peak expectation of 5.75%. This implies a further 25bp hike by year-end and another in Q1 2027.”

“USD/INR rose 0.1% to 95.23, remaining comfortably within the 94-97 range over the past six months. A hawkish RBI and resilient domestic growth remain supportive factors, but elevated oil prices are a key near-term headwind.”