USD/INR: Rupee Plunges Against the Greenback ahead of Union Budget

Indian Rupee plunged against the greenback ahead of India’s Union Budget for 2020. At the interbank market, the value of Rupee depreciated by 10 paise settling down -0.32% at 71.52 against the US dollar. However, the USD/INR exchange rate was seen trading within a trading range of 71.29 and 71.74.

India’s Union Budget for 2020 scheduled to be released on 1^st of February has the potential to put in jeopardy PM Modi’s $5 trillion economic ambitions. All eyes will be on Finance minister Nirmala Sitharaman as there are growing expectations that the new measures can revive the lackluster economic growth.

The GDP growth rate slumped to  4.5% the slowest economic growth pace in more than six years.The slump in the economic growth activity came due to both internal factors such as a slowdown in manufacturing and consumer demand as well as external factors such as global trade wars.

On the currency market, we can see further INR profit taking due to the high uncertainty around the Union Budget 2020.

The dollar index settled down -0.20% at 97.86 interrupting a series of 5 consecutive days of gains.

Elsewhere, foreign institutional investors (FIIS) were net sellers of shares in the local equity market worth Rs -962.28 crore; according to the National Stock Exchange of India data published at the end of Thursday’s trading session. On the other hand, Domestic Institutional Investors (DIIs) were net buyers of equities worth Rs 292.35 crore.

The domestic benchmark equity index NIFTY 50 settled on a negative tone, closing down -0.77% at 12,035.80. However, during early Asia trading hours on Friday, NIFTY 50 was seen touching a new low for the week and was seen quoted at 11,961.75.

The Indian 10-year government bond yield was seen quoted at 6.59% in morning trade compared with its previous close of 6.56%.

Currently, at the interbank market, one US dollar buys 71.40 Rupees, down -0.16% as of 7:56 AM UTC.

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