USD/INR retreats from multi-year high at 77.20 after OPEC cartel promises more oil supply

• Falling oil prices have underpinned the Indian rupee against the greenback.
• The DXY is still firmer amid a fresh wave in risk-off impulse in the market.
• Higher oil prices have yet to be incorporated in multi-decade inflation levels.

The USD/INR has witnessed a steep fall from a multi-year high at 77.17 after OPEC promised to pump more oil to fix the demand-supply imbalance on the urge of US President Joe Biden.

Earlier, the Indian rupee was heavily depreciating against the greenback on boiling oil prices and consistent FIIs withdrawal on geopolitical jitters. Asia, being a major dependent on oil finds widen fiscal deficit in the scenario of rising oil prices.

It is worth noting that the black gold has plunged almost 18% in the last three trading sessions after the cartel promised to use their unutilized capacity to leak more oil into the world economy. This has brought a ray of hope to the Indian rupee and has strengthened it against the greenback. Apart from that, Indian indices have rebounded strongly in the last three trading sessions.

However, the clouds of uncertainty over the Indian rupee have yet not faded off as the galloping inflation in the US is compelling the Federal Reserve (Fed) for an aggressive tightening monetary policy next week. The US Consumer Price Index (CPI) landed at a multi-decade high at 7.9% against the prior print of 7.5%. Moreover, the February print is untouched by the elevated oil prices, which has raised the bets over an interest rate decision yielding a 50-basis point (bps) rate hike.