- USD/INR is aiming towards 76.50 on advancing oil rises and US Treasury yields.
- Risk-off impulse has underpinned the demand for safe-haven assets.
- Raising bets over an aggressive rate policy and hawkish guidance are pushing the yields higher.
The USD/INR pair is gauging a direction on Monday after a long holiday-truncated week. Three trading sessions took place last amid holidays on account of Dr. Baba Saheb Jayanti on Thursday and Good Friday. A rebound in the oil prices and weak Asian markets are denting the demand for the Indian rupee.
Oil prices have rebounded sharply after the lockdown restrictions ease in China. The relaxation in the movement of men, materials, and machines has underpinned the oil prices. China, being the largest importer of fossil fuels carries strong weightage on the oil prices. Also, India is a leading importer of oil, and higher energy bills are indicating a widening fiscal deficit for its economy.
Meanwhile, risk-off impulse amid uncertainty in the global indices is strengthening the US dollar index (DXY). The DXY is eyeing to recapture its previous week’s high at 100.76, which will reinforce the DXY further. Also, the expectations over the rate hike by the Federal Reserve (Fed) are advancing as we are approaching to monetary policy announcement by the Fed, which is scheduled in May. The 10-year US Treasury yields registered a fresh three-year high at 2.88% on Monday. The 10-year benchmark yields are up 2.9% on Monday amid higher odds of an aggressive interest rate policy and hawkish guidance.