- Indian Rupee extends losses amid elevated tensions between India and its Himalayan border neighbour, China
- Indian exports shrank by a third in May keeping pressure on the Rupee.
- US Dollar (USD) investors look towards Federal Reserve Chair Jerome Powell’s second testimony before Congress
- At 10:15 UTC, US Dollar Indian Rupee exchange rate (USD/INR) trades +0.1% at 76.31
The Indian Rupee continues to weaken versus the US Dollar on Wednesday. The Indian Rupee settled on Tuesday -0.3% at 76.25.
At 10:15 UTC, USD/INR is trading +0.1% at 76.31, towards the upper end of the daily traded range. The Rupee has been moving lower versus the greenback over the past 6 weeks, shedding 0.7% of its value in May and an additional -0.8% so far in June.
The Indian Rupee remains under pressure one day after the worst border row with China in over 4 decades, which reportedly left at 20 Indian soldiers dead. Beijing has since issued a thinly veiled threat to its trans Himalayan neighbour, India, saying that it does not want a war, but it will not run away from one either. Meanwhile, Indian Prime Minister Narendra Modi warned that the deaths “will not be in vain”.
The two armies have since held talks in an attempt to diffuse the situation, however, risk off has dominated in the region. India equities were out of favour, with the Sensex trading -0.3% lower, although it had picked up off session lows.
Adding pressure to the Indian Rupee was weak export data. May export figures revealed a 36.4% decline in exports as global demand dried up amid the ongoing coronavirus pandemic and also as production units in India remained shut during lockdown
The safe haven US Dollar started the session on the front foot versus its major peers. However, as the European session progressed, risk sentiment showed signs of improvement and the US Dollar dropped lower versus the likes of the Euro and the Pound.
Looking ahead investors will turn their attention towards a testimony by Federal Reserve Chairman Jerome Powell before Congress. This comes following a testimony yesterday where Mr Powell remained cautious over the outlook for the US economy despite record breaking retail sales earlier in the session.
US retail sales jumped 17.7% in May, well ahead of the 8% forecast and making up from the -16.6% decline in April.