The US dollar is higher against the Indian rupee on Tuesday as investors await details of a possible third stimulus package in the United States, potentially in the ‘hundreds of billions’ of dollars. Meanwhile, the first coronavirus death in the Indian capital of Mumbai will mean all trains are stopped for seven days.
USD/INR was higher by 26 pips (+0.36%) to 74.26 with a daily range of 73.86 to 74.31 as of 12pm GMT.
USD/INR has recovered most of yesterday’s losses and back above 74.0 but below record peaks set last week. The exchange rate is +0.58% this week.
Indian rupee saw some relief on $2bn rupee swap line
The Rupee was easing off Monday’s highs by Tuesday amid news of a possible new US stimulus package and a generally fragile market sentiment that saw stock markets give up early gains.
On Monday the Reserve Bank of India jawboned the rupee by hinting at another possible cut to interest rates at the next Monetary Policy Committee (MPC) meeting on April 3. The central bank is already pumping new money into the system to try to keep the plumbing of the Indian financial system intact. On Monday another round of $2 billion dollar-rupee (USDINR) swaps will happen on March 23 with long-term repo operations as and when required.
US dollar gains from ‘hundreds of billions’ Congress stimulus hopes
The Indian currency is still perceived as risky and remains close to record lows. Most foreign currencies outside the US dollar have been losing value throughout the coronavirus crisis. Non-dollar FX has been falling alongside stock markets, which have entered bear market territory. On Monday US stock markets had their worst day since Black Monday in percentage terms. The Dow Jones lost nearly 3000 points for its third biggest percentage decline ever.
The $8 billion US coronavirus stimulus bill has been passed by congress and will likely be passed by the Senate today. However, there is already talk of a larger more comprehensive bill that could run into the ‘hundred of billions’.