- Indian Rupee holds steady as vaccine news lifts demand for riskier assets
- Concerns that Indian’s economic recovery is already slowing balance covid treatment optimism
- US Dollar (USD) trades lower versus major peers on safe haven out-flows
- US earning season in focus
The US Dollar Indian Rupee exchange rate gained 0.75% across the previous week, settling on Friday at 75.19. At 11:30 UTC, USD/INR trades flat.
The Indian Rupee was out of favour across the previous week on US Dollar capital outflows and weakness in the Indian equity market.
At the start of the new week a more upbeat mood in the market is supporting the riskier Indian Rupee. Coronavirus vaccine hopes have boosted risk appetite after Pfizer and BioNTech announced that the vaccine candidate that they are working on together should be approved by the FDA by the end of the year.
A vaccine is the surest and quickest way for economic growth to return to pre-coronavirus levels across the globe. For this reason, any vaccine developments can have a strong impact on risk sentiment.
The uptick in risk sentiment lifted demand for Indian stocks with the Sensex advancing 0.3%. Foreign investors buying up Indian stocks is also supporting demand for the Rupee.
Whilst sentiment is lifting demand for the Rupee this is being balanced out by concerns over the economic recovery in Indian, which appears to be plateauing shortly after the nationwide lockdown measures were relaxed. Mobility data, jobs data and electricity consumption all point to the rate of recovery slowing.
The US Dollar is trading lower versus its peers as investors sell our of the safe haven and look with cautious optimism towards US earning season which kicks off tomorrow. Big names such as JP Morgan, Citigroup, Johnson & Johnson will provide further evidence as to the extent to the covid impact and what the recovery is looking like.
The upbeat tone is overshadowing coronavirus numbers with daily new cases surging to record levels in both Indian and the US.
With no high impacting US data due for release today, the pair remains vulnerable to sentiment drivers.
