- Indian Rupee (INR) hits 2 week high boosted by vaccine news and surging equity markets
- The Sensex has rallied over 5% across the past week
- US Dollar (USD) declines on safe have outflows even as Californian covid cases surge
- Congress continue debating fresh aid package which is expected to be finalised this week
The US Dollar Indian Rupee (USD/INR) exchange rate is trending southwards for a second consecutive session on Tuesday. The pair settled on Monday -0.2% at 74.75. At 09:45 UTC, USD/INR trades -0.15% 74.62 a 2 week low.
The Indian Rupee is appreciating thanks to a strong Indian equity market, foreign fund inflows and on vaccine optimism boosting risk appetite.
Oxford University and AstraZeneca reported that 100% of those injected with the coronavirus vaccine candidate produced an immune response and crucially they were no adverse side effects. The upbeat report lifted market sentiment because a vaccine would potentially be the only way for economic growth to rebound back to levels seen before the pandemic. When risk sentiment improves demand lifts for riskier assets and currencies such as the Indian Rupee.
In India, AIIMS-Delhi began recruiting volunteers for conducting human clinical trials of the domestically developed coronavirus candidate Covaxin.
Indian equities are performing well for the fifth straight session. The Sensex has jumped 1.4% on Tuesday, putting the total gains since last Wednesday at 5.2%. Foreign institutional investors were net buyers in the capital markets, boosting demand for the Rupee.
The US Dollar moves higher despite California reporting almost 12,000 new daily covid-19 cases; the most since the outbreak started. The total number of cases is now 400,000 meaning that f California was a country it would be ranked fifth in the world for total highest number of infections.
To combat the spreading virus, California’s Democratic Governor Gavin Newsom is shutting California down again.
Fears are rising that rising coronavirus numbers could halt the US economic recovery in its tracks and instead see a deterioration in economic data return.
These fears are currently being overshadowed by vaccine data optimism and hopes of additional economic stimulus. US Congress is debating a fresh coronavirus aid package aimed at helping households and businesses.
