- 1 USD traded at 71.75 against the INR during early Asia trading hours and after the London open
- Fed’s FOMC minutes revealed that the US interest rates will remain on hold – no rate cuts expected on short term
- The People’s Bank of China (PBOC) slashed its benchmark lending rate by 0.05%, to 4.15%
Indian Rupee remains stagnant against the greenback on the currency market following the PBOC rate cut. On the interbank market, USD/INR exchange rate settled 7 paise lower, at 71.64 (New York-based closing price), on Wednesday. During the early Asia trading hours and after the London open, Rupee was seen quote slightly higher around 71.75 against the US dollar.
People’s Bank of China slashed its benchmark lending rate by 0.05% to 4.15% versus 4.20% October reading. The five-year loan prime rate LPR was also reduced by 0.5% to 4.8% from 4.85% October reading. Wall Street analysts are forecasting a further reduction in the LPR rate as China is trying to combat sluggish economic growth while keeping under control inflation.
China’s easing measures are good news for the Indian Rupee exchange rate, which can help INR minimize its losses. However, the macro landscape remains very complex and the Rupee can still find trouble ahead due to the renewed US — China trade tensions.
The domestic benchmark equity index NIFTY 50 closed almost unchanged on Wednesday, settling at 11999 registering a 0.49% gain. However, during early Asia trading hours, NIFTY 50 was seen quoted higher at 12028. The Indian 10-year government bond yield closed at 6.459 versus the 6.458 previous closing prices.
The dollar index, which gauges the greenback’s strength against a basket of major currencies closed moderately higher on Wednesday settling at 97.90 or 0.08% gain.
Fed’s FOMC minutes revealed that the US interest rates will remain on hold and no rate cuts are to be expected in the short-term. The US Federal Reserve slashed its benchmark interest rate three times in 2019. At the beginning of the 2019, the US interest rate stood at 2.5%, but after 3 rate cuts, it was brought down to 1.75%.
USD/INR Technical Pattern
On the technical front, the USD/INR exchange rate over the past three days has established key support at the 71.44 level. While on the upside the USD/INR rate seems capped by intraday resistance established at the 71.82 level.