USD/INR looks to reclaim 75.80 as Russia-Ukraine crisis seems far from over

The USD/INR pair is trading around 75.40, as a little expansion in the risk appetite has brought profit-booking in the greenback near northern levels. The positive tone in the spot, however, is still intact.

The tensions between Russia and Ukraine seem escalating further as the Kremlin has marked Ukrainian President Volodymyr Zelensky as the number one target and his family is the number two target, per The New York Times. The intention of attacking a country’s leader states that the aggression of a nation towards its counterpart has reached its peak and the situation is not going to be resolved anytime soon.

The escalation in tensions between Russia and Ukraine has already bolstered oil prices and India, being the large importer of oil has to go through its various negative implications. This may expand its fiscal deficit substantially and hammer the Indian rupee further. Adding to that, the war situation in Europe is hinting at an upcoming recession in Europe, which may keep the Indian rupee on the backfoot.

The US dollar index (DXY) has slipped below 96.90 amid a dead cat bounce in risk-sensitive assets. Meanwhile, the White House has reported that US President Joe Biden will be meeting with allies and the NATO heads of state and government in an extraordinary virtual summit to discuss the security situation in and around Ukraine. For sure, the agenda of the meeting will roll majorly around more sanctions after all NATO cannot attack Russia, as Ukraine is not a part of NATO.

Well, the situating soaring inflation in India amid rising oil prices will push the Reserve Bank of India (RBI) to step up its interest rates but the greenback will have an upper hand amid its expected aggressive monetary policy and tag of ‘safe-haven’ asset.