- Lockdown in Indian is extended to 31st May
- Oil prices pushed over $30 per barrel
- Federal Reserve Chairman warns over US economic recovery
- At 12:00 UTC, US dollar to Indian Ruppe exchange rate (USD/INR) +0.3% at 76.01 >> Real time exchange rate
The Indian Rupee is extending losses versus the US Dollar on Monday. The Rupee declined -0.4% versus the greenback across the previous week, settling on Friday at 75.83.
At 12:00 UTC, USD/INR is trading +0.3% at 76.01. This is approximately mid-way between the daily traded range of 75.76 -76.06.
The Rupee is trading with a negative bias on Monday as the lockdown in India is extended and amid rising oil prices.
The Indian government has decided to extend the lockdown to the 31st May as coronavirus cases exceed 90,000. Whilst schools, shopping centres and other public places will remain closed, rules will be relaxed in some areas of the country where number of cases are low. Investors fear that a longer lockdown period will weigh on the economic outlook of India.
Domestic bourses were also trading with a negative bias. The Sensex plunged 3.4%. Foreign institutional investors were also net seller in the capital markets.
Rising oil prices are also adding pressure to the Rupee. Oil has jumped in early trade on Monday as economies start to reopen, the demand for oil is starting to rise. Higher oil prices are bad news for India, the world’s third largest oil consumer. Oil was trading back over US$30, up $60 dollars from last month’s slump to -$30 per barrel.
With no high impacting US economic data to be released today, sentiment is moving the US Dollar. A stark warning from Federal Reserve Chairman, Jerome Powell weighed on demand for the US Dollar, whilst rising US – Sino trade tensions kept demand for the safe haven strong.
Jerome Powell warned on Sunday evening that the US economic recovery after coronavirus will be long, taking potentially up to late 2021. He said, that without a vaccine a full economic recovery may not even be possible. Mr Powell added that the US economy could contract by -30% in the second quarter and unemployment could shoot up to 25%.
Looking ahead investors will keep a close eye on US – Chinese relations after President Trump’s latest efforts to cut Huawei off from international semiconductor supplies. Whilst it is too early to determine the effects of Trump’s restrictions on the company, the move has had a cooling effect on US – Sino relations.