Forex News
- Gold extends losses beyond $4,300, dropping more than 4% in the last two trading days.
- Geopolitical tensions and rising bets of Fed interest-rate hikes are hammering precious metals.
- XAU/USD falls below the key 200-day SMA.
Gold (XAU/USD) extends losses on Monday to complete a more than 4% depreciation in the last two trading days. The precious metal has hit $4,268, its lowest price in more than two months, as the safe-haven role has been taken by the US Dollar, which is drawing additional support from higher Treasury yields.
Israel and Iran are ramping up their rhetoric after exchanging missile attacks earlier in the day, adding pressure to an already strained ceasefire. US President Donald Trump said that Israel and Iran “must immediately stop shooting,” but investors remain on edge, wary about an all-out war in the region.
Meanwhile, the bright US Nonfarm Payrolls data seen on Friday, followed by strong services and manufacturing activity data, released earlier in the week, boosted hopes of Federal Reserve (Fed) rate hikes. US Treasury yields jumped, and the Dollar rallied across the board, with investors awaiting the release of US Consumer Price Index figures, due on Wednesday, to confirm those views
Technical Analysis: Gold breaches the 200-day SMA
XAU/USD trades at $4,289, extending a bearish phase after breaching the 200-day SMA, a popular indicator for market analysts, and a self-fulfilling bearish signal. Momentum indicators in the daily chart reinforce the negative tone. The Relative Strength Index (RSI) is hovering near oversold territory around 32, and the Moving Average Convergence Divergence (MACD) line is entrenched below zero, suggesting persistent downside pressure.
On the downside, the precious metal might find support at the channel floor, now around $4,230, ahead of a more meaningful horizontal base at the year-to-date low of near $4,100.
On the topside, the pair is upside attempts are likely to be checked at a previous support between $4,350 and $4,365 (March 28, May 29 lows), which capped bulls earlier on the day. This level is closing the path towards the mentioned 200-day SMA, now around $4,435, and the top of the bearish channel, which would meet the price near Friday's peak, at $4,515.
(The technical analysis of this story was written with the help of an AI tool.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Brown Brothers Harriman’s Elias Haddad (BBH) anticipates the European Central Bank (ECB) will end its pause with a 25 bps hike to 2.25% as core and services inflation run above forecasts. However, weaker Eurozone growth prospects and likely downgraded projections lead the bank to expect EUR/USD to decline, even as ECB tightening helps limit downside in a stagflationary backdrop.
ECB tightening into weakening Eurozone growth
"On Thursday, the ECB is set to end a seven meeting pause with a 25bps policy rate hike to 2.25% to curb rising inflation pressures."
"In May, Eurozone core CPI rose to a 13-month high at 2.5% y/y, tracking closer to the ECB’s Q2 severe scenario (2.4%) than to its baseline forecast (2.2%) and adverse scenario (2.3%). Moreover, services CPI surged to a seven-month high at 3.5% y/y, raising the risk of a persistent pickup in inflation."
"The ECB will also publish its June macroeconomic projections which will likely show a downgrade to its growth forecast."
"PMI data indicate Eurozone real GDP could contract by -0.2% q/q in Q2, a pace that sits between the ECB’s adverse (-0.1%) and severe (-0.3%) scenarios and below its current baseline forecast of +0.1%."
"We expect EUR/USD to fall to 1.1400, reflecting a stronger US growth outlook relative to the Eurozone. ECB rate hikes in a sluggish growth, high inflation environment, is not bullish for EUR but should help cushion the downside."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Rabobank strategists Molly Schwartz and Jane Foley report that Canadian Dollar (CAD) net short positions have surged about 36% to their highest level since December 2025. The Canadian Dollar was the second-worst performing G10 currency in May, as Q1 Gross Domestic Product (GDP) slipped to -0.1% q/q annualized, signaling a technical recession. Nevertheless, markets still price around 1.25 Bank of Canada (BoC) hikes by year end.
Loonie pressured but hikes still priced
"CAD net short positions jumped by around 36% to the highest level since December 2025."
"CAD was the second-to-worst performing G10 currency in May."
"Canadian Q1 GDP registered a slip to -0.1% q/q annualized, marking a technical recession."
"However, the market is still pricing in around 1.25 BoC hikes by year end."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
In the European trading session, United States (US) President Donald Trump has expressed confidence that both Israel and Iran are looking for a ceasefire, through a post on Truth Social, while maintaining the stance that the US blockade on Iranian seaports will remain intact until a final deal with Tehran is reached.
“Both sides, Israel and Iran, are looking to do an immediate CEASEFIRE! Final negotiations on “Peace” are proceeding, subject to ignorance or stupidity getting in its way. The Blockade will remain in place, and in full force and effect, until a “Final Deal” is reached. Things should move quickly. Thank you for your attention to this matter!” Trump wrote.
Market reaction
Back-to-back posts from US President Trump advocating peace between Israel and Iran have weighed on the oil price. During press time, the WTI Oil price is still 3.8% higher to near $92.00 after correcting from the intraday high of $93.50.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
- The Indian Rupee opens on a negative note against the US Dollar.
- The US Dollar gains as surprisingly strong US NFP numbers boost hawkish Fed bets.
- Renewed Israel-Iran war has prompted oil prices.
The Indian Rupee (INR) starts the week on a negative note against the US Dollar (USD), with the USD/INR pair jumping to near 95.65. The pair gains at open as surprisingly upbeat United States (US) Nonfarm Payrolls (NFP) data for May has strengthened the US Dollar, and rising oil prices due to re-escalating conflicts between Iran and Israel have weakened the Indian Rupee.
During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, holds onto Friday’s gains around 100.00, the highest zone seen in two months.
Strong US NFP figures boost hawkish Fed bets
On Friday, the US Bureau of Labor Statistics (BLS) reported surprisingly upbeat official employment data for May. The US NFP arrived significantly higher at 172K against 85K estimates. Meanwhile, the April reading was also revised higher to 179K from 115K. The Unemployment Rate remained steady at 4.3%, as expected. Strong job growth data, compounded with already high inflationary pressures, have resulted in a significant increase in hawkish Federal Reserve (Fed) bets.
The CME FedWatch tool shows that the possibility of the Fed delivering at least one interest rate hike this year has increased to 73.8% from 45.2% seen a week ago.
Renewed Middle East conflicts trigger oil prices
The attacks from Israeli Defense Forces (IDF) in western and central Iran over the weekend, despite US President Donald Trump urging Israeli Prime Minister Benjamin Netanyahu not to retaliate against Iran’s attacks, have renewed fears of an all-out war in the Middle East.
Iran fired ballistic missiles at Israeli military targets over the weekend in retaliation for Israeli aggression in Lebanon.
Rising hostilities in the Middle East have raised concerns over the US-Iran peace deal, prompting fears of a prolonged closure of the Strait of Hormuz, which has resulted in a sharp increase in oil prices. As of writing, the MCX Crude Oil contract expiring on June 18 is up 4.6% to near 9,020.
Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to underperform in a high oil price environment.
FIIs remain net sellers so far in June
So far in June, Foreign Institutional Investors (FIIs) have remained net sellers on all trading days, and offloaded their stake worth Rs. 30,814.47 crore. Overseas investors also remained net sellers in May and pared their stake worth Rs. 55,963.33 crore. Foreign investors are dumping their investments in the Indian stock market due to growing concerns over India Inc.’s earnings projections amid higher oil prices.
Technical Analysis: USD/INR aims to extend recovery towards 96.00
USD/INR trades significantly higher at around 95.65 at press time. The pair retains a bullish near-term bias as spot returns above the 20-day exponential moving average (EMA) at 95.4720, keeping the recent uptrend structure intact.
The Relative Strength Index (RSI) at 53.9 is mid-range and slightly positive, hinting that upside momentum is modest but still favors dip-buying rather than a deeper correction for now.
On the downside, the June 5 low at 94.95 is the immediate low, and a sustained daily close below it would open the door to a further slippage towards the May 7 low around 94.00. Looking up, the pair could reclaim the all-time high around 97.10 if it rallies further above the June 4 high at 96.30.
(The technical analysis of this story was written with the help of an AI tool.)
Economic Indicator
Nonfarm Payrolls
The Nonfarm Payrolls release presents the number of new jobs created in the US during the previous month in all non-agricultural businesses; it is released by the US Bureau of Labor Statistics (BLS). The monthly changes in payrolls can be extremely volatile. The number is also subject to strong reviews, which can also trigger volatility in the Forex board. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish, although previous months' reviews and the Unemployment Rate are as relevant as the headline figure. The market's reaction, therefore, depends on how the market assesses all the data contained in the BLS report as a whole.
Read more.Last release: Fri Jun 05, 2026 12:30
Frequency: Monthly
Actual: 172K
Consensus: 85K
Previous: 115K
Source: US Bureau of Labor Statistics
America’s monthly jobs report is considered the most important economic indicator for forex traders. Released on the first Friday following the reported month, the change in the number of positions is closely correlated with the overall performance of the economy and is monitored by policymakers. Full employment is one of the Federal Reserve’s mandates and it considers developments in the labor market when setting its policies, thus impacting currencies. Despite several leading indicators shaping estimates, Nonfarm Payrolls tend to surprise markets and trigger substantial volatility. Actual figures beating the consensus tend to be USD bullish.
- USD/CHF rallies to two-month highs near 0.8000.
- Escalating tensions in the Middle East have crushed risk appetite and are buoying the safe-haven USD.
- Strong US labour data boosted Fed tightening hopes on Friday and sent the US Dollar surging.
The US Dollar is rallying for the second consecutive day against the Swiss Franc (CHF) on Monday, reaching levels near 0.8000 for the first time in the last two months. A risk-off mood amid the escalating tensions in the Middle East and growing bets of Federal Reserve (Fed) rate hikes is boosting the US Dollar across the board on Monday.
Investors remain reluctant to take risks amid news of reciprocal attacks between Israel and Iran, which have boosted concerns about the resumption of an all-out war in the region, and sent Oil prices nearly $5 higher.
The US Dollar, on the other hand, is drawing support from rising bets on Fed hikes this year, as a bright US Nonfarm Payrolls report culminated a string of solid US macroeconomic releases, highlighting the resilience of the US economy to the energy shock stemming from Iran’s war. In the current context of growing inflationary pressures globally, the CME Group’s Fed Watch Tool shows a nearly 70% chance that the Fed will raise rates before the year-end, up from 13% one month ago
Technical Analysis: USD, heading to 0.8000 and probably higher
USD/CHF broke and confirmed above the near-term trendline resistance last week and is now heading higher. The Relative Strength Index (RSI) in the daily chart is near 65, and a positive Moving Average Convergence Divergence (MACD) line with a rising histogram hints at solid bullish momentum.
Bulls are heading to the psychological horizontal barrier at 0.8000, which, together with the year-to-date high, near 0.8040, is likely to pose significant resistance. Further up, the next target is the December 2025 high, at 0.8085.
Downside attempts, on the other hand, are likely to find support at the previous resistance area near 0.7930 ahead of Friday's low, at 0.7870
(The technical analysis of this story was written with the help of an AI tool.)
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
United States (US) President Donald urges Iran and Israel to pause the exchange of attacks, through a post on Truth Social, during the European trading session on Monday.
“Israel and Iran must immediately stop shooting,” Trump wrote.
The message from US President Trump will likely calm market nerves, as military attacks between Israel and Iran have upended market sentiment.
However, a report from Tasnim agency has stated that Iran is prepared for a long-term war with Israel.
Earlier in the day, Iranian Foreign Ministry spokesperson Esmail Baghaei said that the US is responsible for the recent ceasefire breaches.
Market reaction
There has been a slight downtick in the WTI Oil price after US President Trump's post. The WTI Oil price drops from the intraday high of $93.50 to near $92.50.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
ING’s Chris Turner expects the Bank of England (BoE) to avoid tightening this year, with only modest rate hikes priced by markets. Given a hawkish European Central Bank and fragile equity sentiment, he anticipates EUR/GBP moving back toward 0.8680, while GBP/USD could test 1.3300 with outside risk to 1.3200 in a risk-off environment for the Pound.
BoE caution weighs on Pound outlook
"It looks as though the Bank of England will try to avoid tightening this year. The market expects relatively little of the Bank this summer, but does price 21bp of tightening at the September meeting."
"Friday's release of inflation expectations data amongst the corporate community also gives the BoE some confidence that second-round inflation effects are less likely."
"In theory, EUR/GBP should be trading higher if the BoE is dragging its feet on tightening at a time when the ECB is about to hike and the data is prompting a rethink on the Fed's position."
"Equally, sterling is generally seen as a pro-risk currency with a large financial sector, meaning that it generally underperforms in a risk-off environment."
"Given what should be a hawkish ECB meeting this week and a vulnerable equity environment ahead of large forthcoming supply, we favour EUR/GBP making a move back to 0.8680, while GBP/USD can test 1.3300 and has outside risk to 1.3200 this week."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- EUR/JPY trades around 184.10 and loses 0.32% on Monday despite an improvement in Eurozone investor sentiment.
- German Factory Orders decline more than expected, adding to concerns about European growth.
- The Japanese Yen remains supported by expectations of further BoJ tightening and intervention warnings.
EUR/JPY trades around 184.10 on Monday at the time of writing, down 0.32% on the day, as the Japanese Yen (JPY) continues to benefit from a favorable backdrop driven by expectations of higher interest rates in Japan and renewed warnings from Japanese authorities regarding currency weakness.
The Euro (EUR) failed to benefit from the release of the Eurozone Sentix Investor Confidence Index. The indicator improved to -13.4 in June from -16.4 in May, signaling a recovery in investor sentiment. However, the index remains deeply in negative territory, highlighting persistent concerns about the region’s economic outlook.
Earlier in the day, German economic data weighed on the shared currency. Germany’s Factory Orders fell by 3.8% MoM in April after a revised 4.5% increase in March, significantly worse than the market expectation for a 1.2% decline. On an annual basis, orders rose by 1.6% after a revised 6.1% increase in the previous month, pointing to a loss of momentum in the manufacturing sector of Europe’s largest economy.
Investors are also focused on the upcoming European Central Bank (ECB) monetary policy meeting later this week. According to Commerzbank economist Rainer Guntermann, a 25-basis-point rate hike is almost certain and already fully priced in by markets. However, he believes another increase as soon as July would be premature and instead expects a further hike in September before lower energy prices help ease inflationary pressures and eventually create room for policy easing in the longer term.
On the Japanese side, fundamentals continue to support the Japanese Yen (JPY). Revised Gross Domestic Product (GDP) data confirmed that Japan’s economy expanded by 0.5% QoQ in the first quarter, while annualized growth reached 1.8%, outperforming market expectations. In addition, bank lending increased by 5.7% YoY in May, marking its fastest pace of growth since March 2021.
These indicators reinforce expectations that the Bank of Japan (BoJ) could tighten monetary policy at its upcoming meeting. Deutsche Bank noted that accelerating wage growth and resilient household spending continue to strengthen the case for a rate hike. Futures markets are therefore pricing in a high chance of a policy move in the near term.
Japanese Finance Minister Satsuki Takayama also stated on Friday that the government reserves the right to take decisive action against excessively volatile currency moves. These comments echoed those made ahead of the intervention episode in late April, when USD/JPY experienced a sharp decline. Meanwhile, Japan’s foreign exchange reserves recorded their largest monthly drop since records began in 2000, highlighting the scale of the authorities’ efforts to support the Japanese Yen.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.11% | 0.17% | -0.18% | 0.07% | -0.03% | -0.21% | 0.27% | |
| EUR | -0.11% | 0.05% | -0.31% | -0.05% | -0.15% | -0.32% | 0.14% | |
| GBP | -0.17% | -0.05% | -0.38% | -0.13% | -0.24% | -0.38% | 0.07% | |
| JPY | 0.18% | 0.31% | 0.38% | 0.23% | 0.12% | -0.02% | 0.42% | |
| CAD | -0.07% | 0.05% | 0.13% | -0.23% | -0.11% | -0.26% | 0.18% | |
| AUD | 0.03% | 0.15% | 0.24% | -0.12% | 0.11% | -0.15% | 0.31% | |
| NZD | 0.21% | 0.32% | 0.38% | 0.02% | 0.26% | 0.15% | 0.43% | |
| CHF | -0.27% | -0.14% | -0.07% | -0.42% | -0.18% | -0.31% | -0.43% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
Commerzbank’s Charlie Lay highlights that the Reserve Bank of India kept its policy rate at 5.25% and signalled a preference to bolster the Rupee via capital inflow measures rather than tightening. A sizeable inflow package and stronger-than-expected GDP support INR, but the bank still sees vulnerability to high Oil prices and a firm US Dollar, with some Rupee weakness tolerated.
RBI supports rupee via inflow package
"Last Friday, the Reserve Bank of India (RBI) left the policy rate unchanged at 5.25% and maintained its neutral stance. This was despite rising inflation risks from higher oil prices, a weaker rupee, and expectations of a below-normal monsoon, which raises risks of higher food prices."
"RBI raised the inflation forecast for the current fiscal year (FY) 2026-2027 to 5.1% from 4.6% while lowering its GDP growth forecast to 6.6% from 6.9%. The key message was RBI's preference to support INR through capital inflow measures rather than higher interest rates."
"Together with the government, RBI unveiled a broad package to support the rupee, including tax exemptions on foreign investment in government bonds, expanded foreign access to sovereign debt, a subsidised FCNR(B) deposit scheme, and a concessional FX swap facility for state-owned firms. The measures are estimated to attract USD30-50bn of inflows over the next year."
"In FX, USD/INR fell sharply last Friday by 0.9% to just under 95.00 following the announcements. The measures should alleviate near-term balance of payments concerns and reduce pressure from portfolio outflows."
"Nevertheless, INR remains vulnerable to elevated oil prices and a firmer USD. While the latest measures could help slow the pace of depreciation, we suspect RBI will continue to tolerate some INR weakness."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
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