The Indian Rupee is holding steady versus the US Dollar on Tuesday, after advancing at the start of the week. The Indian Rupee settled +0.17% higher on Monday at 75.70.
At 11:30 UTC, USD/INR is trading -0.03% at 75.68. This was mid way between the daily traded range of 75.55 – 75.79.
INR: Goldman Sachs Revises Indian Q2 GDP Forecast Downwards
This Indian Rupee is trading flat on Tuesday as coronavirus cases soar and as analysts raise doubts over whether the government’s recently announced stimulus package will be sufficient to prevent the Indian economy falling into a deep downturn.
Investment bank Goldman Sachs warned that it expects India to experience its deepest contraction on record in the second quarter of this year despite the government’s $266 billion stimulus plan.
Goldman Sachs forecasts a -45% contraction after recent data highlighted the damage that the ongoing lockdown is causing to the economy. Goldman Sachs had previously forecast a -20% contraction in the second half.
On a more upbeat note, the investment bank sees a stronger rebound in the third quarter with the economy growing 20% and 14% growth in the fourth quarter of the year.
The report from Goldman Sachs comes as concerns grow over the rate of coronavirus infections in India, the world’s second most populous country, despite the recently extended lockdown.
100,000 covid-19 cases have now been reported, up 4970 in 24 hours. The death toll stands at 3163 after jumping by 134 in the past 24 hours.
USD: Dollar Under Pressure Ahead of More Optimistic Jerome Powell
The US dollar is trading broadly on the back foot, although off session lows as investors look ahead to Federal Reserve Jerome Powell’s testimony later today. His speech was released 18 hours in advance of his appearance and investors have been encouraged by the pre-released remarks.
Jerome Powell will pledge to keep rates low until the US returns to full employment. The tone of the speech is being seen as an improvement on Jerome Powell’s remarks from the interview over the weekend
The safe haven US Dollar was also under pressure following reports of successful early stage vaccination trials by Moderna Inc a US biotechnology firm. News that the firm’s vaccine had produced an immune response in humans was well received, particularly after Jerome Powell said at the weekend that a full economic recovery may only be possible with a vaccination against covid-19
Investors will now look ahead to the release of US building starts data today ahead of the minutes from the latest Federal Reserve monetary policy meeting.