INR

The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) announced on Wednesday that it held the benchmark Repo Rate steady at 5.25% following the conclusion of the August monetary policy meeting.

The decision came in line with the market expectations.

Speeches from RBI Governor Sanjay Malhotra

West asia conflict continues to challenge global economy.Crude oil prices, currencies, financial markets remain volatile.

Global economic environment has become increasingly unstable.

MPC retains policy stance at ‘neutral.’

Headline inflation has edged up above target.

Higher inflation mostly on account on fuel, food with little signs of generalisation of price pressures so far.

Domestic economic activity has exhibited resilience.

There is need for greater clarity on inflation before taking policy action.

Supply side pressures from west asia conflict have eased somewhat.

Inflation not getting broad based, expected to decline after peaking in Q3FY27.

MPC underscored it will maintain close vigil, stay resolute on aligning inflation to target.

Investment activity remains steady.

Indian economy performed better than expected in Q1FY27.

Q3 FY27 CPI inflation seen at 5.9% (previously at 5.9%).

Q4 FY27 real GDP growth seen at 6.8%.

Q4 FY27 CPI inflation seen at 5.5%.

USD/INR reaction to the RBI interest rate decision

The Indian Rupee (INR) catches fresh offers and extends lower in an immediate reaction to the RBI interest rate decision. The USD/INR pair currently trades at 95.05, down 0.04% on the day. 

This section below was published on August 5 at 00:30 GMT as a preview of the Reserve Bank of India (RBI) interest rate decision.

• The RBI is set to leave policy rates unchanged on Wednesday.
• The Reserve Bank of India might retain the data-dependent approach for the monetary policy outlook.
• Investors will closely track comments on FCNR deposits, inflation and the economic outlook.

The Reserve Bank of India (RBI) is set to announce its bi-monthly monetary policy decision on Wednesday at 10:00 AM IST (04:30 GMT), another meeting coming at a time when uncertainty remains high over the duration and economic fallout of the ongoing Middle East conflict.

RBI seen on hold as inflation remains within target band

Analysts at Commerzbank expect the Reserve Bank of India to maintain its current policy stance, noting that the RBI is “expected to leave the benchmark repurchase rate unchanged at 5.25% at its next meeting on 5 August.” While they acknowledge that “inflation risks remain tilted to the upside due to higher global commodity prices and a weaker monsoon season,” Commerzbank highlights that the June Consumer Price Index (CPI) print “rose 4.4% yoy, which was within RBI’s 2-6% target range,” reinforcing the case for policy continuity in the near term.

The RBI is also expected to leave the Standing Deposit Facility (SDF) and the Marginal Standing Facility (MSF) rates unchanged at 5% and 5.5%, respectively.

According to the latest Reuters poll, 68 of the 72 economists expect the RBI to leave its policy rates at their current levels.

So far this year, the RBI has maintained the status quo at all three policy meetings and has kept rates unchanged since cutting the Repo Rate by 25 basis points (bps) to 5.25% in the December 2025 meeting.

What happened in the last meeting?

In the June policy meeting, the Indian central bank raised its inflation forecast, after leaving policy rates steady, for FY26-27 to 5.1% Year-on-Year (YoY) from 4.6% projected earlier, citing that higher input prices such as base metals, plastic and rubber, and rising commercial Liquefied Petroleum Gas (LPG) prices are putting upward pressure on overall prices.

The RBI also lowered its real Gross Domestic Product (GDP) growth forecast for the current year to 6.6% from its prior expectations of 6.9%.

On the monetary policy outlook, RBI Governor Sanjay Malhotra said that it is “prudent to wait for greater clarity to emerge” and the central bank will remain “data-dependent”.

Key things to watch

Investors will pay close attention to commentary from RBI Governor Malhotra regarding inflation and the economic outlook on the back of the ongoing geopolitical crisis.

In the last meeting, RBI Governor Malhotra acknowledged heightened global uncertainty amid geopolitical risks, and said that the extended disruption in global supply chains and higher energy prices have prompted risks both to inflation and growth. However, he assured that the economy is able to “withstand these shocks with minimum pain”.

In an interview with Businessline, released last week, RBI Governor Malhotra made clear that price stability is their key priority, but policymakers don’t see any signs of price pressures entrenching. “Our primary mandate is inflation and price stability. Therefore, we will do whatever is required first, to keep price stability and then, to see to what extent we can support growth,” Malhotra said.

Investors will also focus on commentary about India’s interest rate outlook. Analysts at Axis Bank say, “The MPC is ​likely to shift language acknowledging risks of firmer inflation and policy action ahead, while maintaining a data-dependent approach.”

Financial markets would also be keen to know the performance of Foreign Currency Non-resident (FCNR) deposits, which were announced in the June meeting, aiming to increase the inflow of foreign funds to support forex reserves. The tool allows commercial banks to raise funds via foreign currency deposits whose ‌full hedging cost is borne by the RBI.

India flows recover as DBS flags stronger debt, equity and FCNR(B) momentum

Analysts at DBS Group Research highlight that “the flows picture is, meanwhile, on the mend,” pointing to a “resumption in portfolio inflows into equity and debt markets as well as positive cues on the swap schemes.” They note that “July saw debt markets attract more than $2bn in inflows, bringing FYTD debt inflows to $7.7bn, while equities recorded $1.5bn worth flows following consecutive months of outflows.”

In addition, DBS cites comments from RBI Governor Malhotra, who said in an interview that “banks had mobilized a cumulative $32bn via the swap windows to-date, already surpassing the scale of inflows raised back in 2013.” Against this backdrop, DBS reiterates that “we expect the scale of the FCNR(B) deposits, in particular, to pick up in second half of the scheme’s validity period, as KYC/compliance requirements are completed,” and cautions that “at the current run-rate, our conservative estimate of $45-50bn of total inflows under the special schemes could be overshot.”

USD/INR technical outlook points to a mild bearish bias

USD/INR retains a mildly bearish near-term bias as it holds below the 20-day Exponential Moving Average (EMA) at 95.72. The short-term trend structure suggests the pair is capped by this dynamic resistance, while the 14-day Relative Strength Index (RSI) at 45 keeps momentum in a neutral-to-bearish zone, hinting at a lack of strong buying conviction after the recent pullback from the 96.00 area.

On the topside, immediate resistance is defined by the 20-day EMA at 95.73, and a daily close above this barrier would be needed to extend the recovery towards 96.00. On the downside, major sup

• The Indian Rupee opens flat around 95.33 against the US Dollar in the countdown to the RBI policy.
• Investors expect the RBI to leave the Repo Rate unchanged.
• Financial markets await the outcome of US-Iran talks.

The Indian Rupee (INR) trades flat at around 95.33 against the US Dollar (USD) in the opening session on Tuesday. The Indian currency is expected to trade sideways as investors await the Reserve Bank of India’s (RBI) monetary policy announcement on Wednesday.

RBI seen holding rates with inflation still in target band

Analysts at Commerzbank note that the Reserve Bank of India is likely to maintain its current policy stance, with the central bank “expected to leave the benchmark repurchase rate unchanged at 5.25% at its next meeting on 5 August.” They acknowledge that “inflation risks remain tilted to the upside due to higher global commodity prices and a weaker monsoon season,” but point out that the latest June CPI report “showed it rose 4.4% YoY, which was within RBI’s 2-6% target range,” reinforcing the case for policy continuity in the near term.

Oil prices rise amid US-Iran deal uncertainty

Oil prices attract bids on Tuesday as financial markets remain concerned about the outcome of talks between the United States (US) and Iran. On Monday, US President Donald Trump said that discussions with Iran are going on, but he doesn’t know why they are denying it in the media. Trump added, “This is the last chance for them to sign a good document.” He further added, “They’re going to go quickly one way or the other. It’s not very complex. We’re talking about the opening of the strait, having it open literally by tomorrow—completely open,” Reuters reported.

Over the weekend, US President Trump shelved planned attacks on Iran, stating that Tehran has agreed to reopen the Strait of Hormuz and the nuclear conditions. This led to a significant plunge in oil prices.

In the opening session, the MCX Crude Oil contract expiring on August 19 trades 1.3% higher to near Rs. 7,745.

Higher oil prices bode poorly for currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs.

US JOLTS Job Openings data awaited

During the Asian session, the US Dollar clings to Monday’s recovery move, with investors awaiting the US JOLTS Job Openings data for June, which will be published at 14:00 GMT. US employers are expected to have posted 7.45 million fresh jobs, slightly lower than 7.594 million in May.

At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, reflects strength near 100.00.

This week, the major event for the US Dollar will be the US Nonfarm Payrolls (NFP) data for July, which will be released on Friday.

Technical Analysis: USD/INR remains under 20-day EMA

USD/INR trades at around 95.33, maintaining a bearish near-term bias as spot holds beneath the 20-day exponential moving average (EMA) at 95.7234.

The pair’s inability to reclaim this short-term EMA suggests upside remains capped, while the Relative Strength Index (14) at 44.18 leans slightly soft, hinting at waning bullish momentum rather than outright oversold conditions.

On the topside, immediate resistance is located at the 20-day EMA at 95.72, and a sustained break above this barrier would be needed for a more constructive recovery toward the July 29 high near 96.00. On the downside, major support levels are the July 7 low at 94.80 and the June low at 94.21.