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The Indian rupee (INR) traded firmer on Tuesday amid lower oil prices and lower US Treasury yields. Prime Minister Narendra Modi’s Bharatiya Janata Party won elections in three of the five Indian states that went to polls recently. Having said that, the election outcome may favor equity inflows, easing depreciation pressure on the Indian rupee in the short term.
The Reserve Bank of India (RBI) is expected to announce on Friday that it will continue to suspend interest rates at 6.50% and maintain a hawkish stance. Analysts predict the Monetary Policy Committee (MPC) will pause for a fifth consecutive time amid concerns about a potential food price shock affecting inflation expectations.
Ahead of the RBI rate decision, investors will focus on the U.S. ISM Services Purchasing Managers’ Index, which is due to be released later on Tuesday. This number is expected to rise to 52.0 from 51.8.
