- Fears of a second wave of covid-19 is weighing on risk sentiment, hitting demand for riskier currencies such as Indian Rupee (INR)
- Cases in India jump to 332,000
- Safe haven flows boost US Dollar ahead of US retail sales data tomorrow
- At 10:15 UTC, US Dollar Indian Rupee (USD/INR) trades at +0.05% at 76.08
The Indian Rupee is extending losses from the previous week amid growing fears of a second wave of coronavirus infections. The Rupee lost 0.6% against the greenback last week, settling on Friday at 76.05.
At 10:15 UTC, USD/INR is trading +0.05% at 76.08 as it eases off the daily high of 76.18 reached earlier in the session.
Risk aversion is dominating in the markets as a rising number of coronavirus cases particularly in the US and Beijing, the world’s two largest economies, weigh on risk sentiment. Whilst 24 US states have seen a worrying up tick in covid-19 cases, some states such as Florida and Arizona have seen record rises in daily cases around a month after lockdown measures started to ease.
A covid-19 outbreak of around 100 cases in Beijing has also raised fears of a resurgence of the pandemic in China.
India has also seen a jump of over 11,000 coronavirus cases for a third straight day on Monday, taking the number of infections to over 332,000, while the death toll approaches 10,000
When risk sentiment declines investors move out of riskier currencies such as the Indian Rupee, whilst flows into the safe haven US Dollar increase.
Adding pressure to the Indian economy, a slow start has been reported to India’s ambitions to provide 3 trillion rupees in loans to help small businesses through the coronavirus crisis. Reports that only a tiny fraction of the available funds have been disbursed by banks, means many small businesses have been left on the brink of collapse.
There is no high impacting US data due for release today. Sentiment will continue to drive the greenback. Investors will also look ahead to the release of US retail sales for May due for release tomorrow. Retail sales are expected to show a rebound in May +8% month on month, compared to a -16% decline in April.
Federal Chair Jerome Powell will also give a testimony before Congress on Wednesday and Thursday. A slightly more upbeat Jerome Powell compared to last weeks’ gloomy outlook could go some way to boosting risk sentiment a pulling the US Dollar lower.
