- Indian Rupee (INR) drops amid risk off trading as covid cases climb
- Indian retailers saw 67% decline in business in the second half of June
- US Dollar (USD) gains ground across the board on safe haven demand
- US Dollar Indian Rupee (USD/INR) exchange rate snaps 4 session losing streak
The US Dollar Indian Rupee exchange rate declined 1.2% across the previous 4 sessions. The pair settled on Monday at 74.63.
At 10:15 UTC, USD/INR trades +0.4% at 74.89. This is towards the upper end of the daily traded range.
Risk aversion is dominating trade on Tuesday as concerns over rising coronavirus cases unnerve investors. Globally, 11.5 million cases have been recorded. In India the number of cases recorded reached 720,000, up by 24,000.
Domestic data did little to support the Rupee. According to the Retailers Association of India (RAI) there has been no significant growth in business for retailers in the second half of June. The latest business survey conducted on 100 big and small retailers reported a 67% drop in growth between June 15th – 30th compared to the same period last year.
The data points to a grim situation for retailers, but also the economy as a whole, given that retail is the backbone of consumption.
Whilst the risk off mood dragged on demand for the riskier Rupee, it boosted demand for the safe haven US Dollar.
Investors are shrugging of data released yesterday which showed that the dominant US service sector rebounded firmly. The ISM non-manufacturing PMI printed at a solid 57.1 in June. This was well ahead of the previous month’s 45.5 and marked the biggest monthly increase since the survey started in 1977. The level 50 separates expansion from contraction.
The data indicates that restaurants, dentists and other service style companies that dominate the US economy saw a jump in growth in June as lockdown restrictions were eased and businesses reopened. Whilst the data is very encouraging investors fear that rising coronavirus cases could see the US roll back some reopening measures and knock the economic recovery off track.
Investors will now look ahead to the release of JOLTS job opening data. Analysts are expecting job vacancies to have fallen in May to 4.85 million, down from 5.06 million in April.
