USD/INR: Rupee Paring Gains against Buoyed US Dollar

India’s Rupee is paring its recent gains against the greenback, which was kept afloat by the Fed. At the currency market, the value of Rupee depreciated by 10 paise settling down -0.14% at 71.29 against the US dollar. However, the USD/INR exchange rate was seen trading within a trading range of 71.13 and 71.38.

The main catalyst behind the INR sell off was mainly the US dollar strength. The US Federal Reserve kept its interest rate policy unchanged on Wednesday and reaffirmed its stance on 2% inflation target. The Fed Committee left benchmark funds rate between 1.5% to 1.75% following 3 consecutive rate cuts in 2019.

In other news, the Reserve Bank of India (RBI) has named Janak Raj has the third member of the monetary policy committee (MPC). Janak Raj replaced Micheal Patra who was appointed as Deputy Governor.

Looking forward over the economic calendar, on Friday a stream of domestic data will keep Rupee on the edge ahead of the Union Budget for 2020. The most important piece of risk event will come in the form of the final GDP growth rate for the fiscal year 2019 – 2020. India’s economy is forecast to grow by 5.0% compared to 6.8 % expansion seen at the end of 2018.

The dollar index settled higher 0.09% at 98.06 for five consecutive days.

Elsewhere, foreign institutional investors (FIIS) were net sellers of shares in the local equity market worth Rs -1014.27 crore; according to the National Stock Exchange of India data published at the end of Friday’s trading session. On the other hand, Domestic Institutional Investors (DIIs) were net buyers of equities worth Rs 1520.9 crore.

The domestic benchmark equity index NIFTY 50 settled on a positive tone, closing up 0.61% at 12,129.50. However, during early Asia trading hours on Thursday, NIFTY 50 was seen touching a new low for the week and was seen quoted at 12,019.85.

The Indian 10-year government bond yield was seen quoted at 6.56% in morning trade compared with its previous close of 6.57%.

Currently, at the interbank market, one US dollar buys 71.57 Rupees, up 0.39% as of 8:00 AM UTC.

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