USD/INR exchange rate: Indian Rupee Feeling the Pressure after Dovish RBI

The dovish comments coming from the RBI Governor Shaktikanta Das have kept the Indian Rupee under renewed selling pressure, closing on a negative tone for the third consecutive day. On the currency market, the value of Rupee depreciates by 9 paise at the end of Tuesday and settled at 71.00 against the US dollar, but not before touching a low of 71.16.

During the early Asia trading hours, the USD/INR exchange rate was seen quoted within a range of 71.00 — 71.08. Despite improved global risk sentiment amid trade war easing tensions the domestic currency of Asia’s third largest economy still struggles to take advantage of the positive developments.

The dollar index traded modestly higher on Tuesday and settled at 97.18 registering a +0.06% gain.

Domestic and foreign institutional investors (FIIs) have together bought around Rs 82,630 crore since the beginning of the year, the highest reading seen in the past 11 years

Elsewhere, the trade deal has provided a support for the Chinese economy. China has a GDP target for this year between 6.0% and 6.5%, but the growth rate slowed down to 6.2% in the first three quarters of 2019, in line with PBOC’s range forecast. Most Wall Street economists believe that the growth rate will stagnate at around 6% in 2020.

In the India, the International Monetary Fund (IMF) is expected to revise down its GDP projection according to chief economist Gita Gopinath. The IMF is currently forecasting India’s economic growth at 6.1% in 2019 followed by a 7.0% growth rate in 2020.

“If you look at recent incoming data, we will be revising the numbers and we will come up with numbers in January. It is likely to be a significant downward revision,” Gopinath said at the Times Network India Economic Conclave

The domestic benchmark equity index NIFTY 50 reached a new all time high on the back of foreign inflow and settled at 12,165. During early Asia trading hours NIFTY 50 was seen trading higher at 12,204. Year-to-date the Indian stock market has gained 12.21%, benefiting from foreign investment inflow.

The Indian 10-year government bond yield was seen quoted at 6.75 versus 6.75 previous closing prices.

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