- Rating agency S&P Global say Indian economy is in deep trouble, although remained optimistic about the coming fiscal year
- GDP forecast -5% contraction
- US Dollar broadly lower despite rising covid cases
- Across the week, the US Dollar Indian Rupee exchange rate (USD/INR) is trading -0.9% lower.
The Indian Rupee is holding steady versus the US Dollar on the final trading day of the week. The Rupee advanced cautiously versus the greenback on Thursday, settling +0.1% at 75.58.
At 10:15 UTC today, the Rupee continues to hold this price.
Risk sentiment remains buoyant despite the rising number of coronavirus cases in both the US and India and despite S&P Global rating agency saying that India’s economy was in deep trouble.
The International rating agency said that it expected Indian GDP to contract by -5% this fiscal year. The agency warned that the economy was in trouble over difficulties in containing covid-19, a lacklustre policy response and underlying vulnerabilities to the economy, particularly in the financial sector.
The S&P was more optimistic about the coming year, seeing a bounce back in economic activity in India.
For the Asia Pacific region as a whole, S&P Global projected an economic contraction of -1.3% in 2020, before 6.9% growth in 2021.
Daily new coronavirus cases increased by a record 40,000 in the US on Thursday, raising fears that lockdown restrictions or at least a slowing of the reopening of economies will be needed to bring the spread of the killer virus back under control.
Texas, which has been following a more aggressive reopening plan has slammed the brakes on easing restrictions in order to control surging infections and hospitalisations.
Investors will now look ahead to the release of US personal spending and income data as well as consumer confidence figures. Analysts are expecting consumer spending to follow retail sales data higher. However personal income is expected to drop.
Consumer confidence is a closely watched macro point because it gives an indication as to how the economic recovery is progressing. A consumer who is confident in their personal financial position and job security will often spend more, which is good news for the US economy. Analysts are expecting consumer confidence to tick higher.