USD/INR extends the bounce to test 71.00 on dovish RBI’s Das

Speaking at an event in Mumbai on Monday, the Reserve Bank of India (RBI), Indian central bank, Governor and MPC Chair Shaktikanta Das said that there is space for further policy action to support growth but the timing needs to be optimum to maximize the impact.

“While taking a pause, we very carefully and very definitely said there is space for further monetary policy action but the timing will have to be decided in a manner that its impact is optimum and the impact is maximized," he added.

Earlier this month, the RBI surprised markets by leaving the key rate unchanged at a level that is the lowest in a decade. However, markets have already priced in a rate cut at its February monetary policy meeting.

FX Implications

On the dovish comments from the RBI Governor, the Indian rupee slipped further and reached fresh four-day lows against the US dollar at 70.99.

USD/INR extends its bounce from multi-month lows into a second straight session on Monday, as uncertainty over the US-China trade deal details continues to undermine the sentiment around the Asian currencies.

USD/INR Technical levels to consider