- Indian Rupee (INR) is trading flat against a very weak US Dollar (USD)
- Indian coronavirus numbers are surging and Nomura forecasts -6.1% contraction in GDP in 2020
- USD falls sharply across the board on US – Chinese tensions and concerns over US economic recovery
- US durable goods orders expected to show a solid increase for the second straight month
The US Dollar Indian Rupee (USD/INR) is consolidating losses after falling lower for the past two consecutive weeks. The pair slipped -0.2% to close the previous week at 74.76. At 11:15 TC, USD/INR trades flat at 74.76.
The Indian Rupee is holding steady thanks to a weaker US Dollar across the board even as investment bank Nomura warned that recent improvements in economic activity in India are likely to fade after a normalising of data.
The downbeat outlook comes as Prime Minister Narendra Modi warns that the coronavirus pandemic could derail decades of progress in India. Despite the severe lock down ending, India is still facing huge disruptions to normal life. The deepening crisis could drag on Indian economic development for years.
Today India has recorded 1.4 million confirmed coronavirus case, the third largest infection rate after US and Brazil. Infections are rising at a record rate of 49,000 every day. Fatalities are also rising with more than 32,000 deaths now recorded.
Nomura forecast India’s GDP will contract by -6.1% whilst HSBC has forecast a -7.2% dip this year. The Domestic rating agency ICRA is painting an even gloomier picture, projecting a -9.5% contraction.
The US Dollar has plunged versus its major peers at the start of the week amid a mix of geopolitical tensions and uncertainty over the US economic recovery.
With coronavirus cases in the US surging, economic data is starting to show the impact of renewed lock downs in parts of Southern states. Last week data showed that the recovery in the labour market had stalled. Investors are growing increasingly nervous that the rising covid numbers are undermining the US economic recovery.
Also dragging on the greenback are intensifying US – Chinese tensions which saw Beijing close the US consulate in Chengdu. The tit for tat move came after the US closed the Chinese consulate in Houston on spying accusations.
Investors will now look ahead to US durable goods data. Analysts are expecting durable goods orders to increase +7.2% in June after jumping +15.7% in May. A strong reading could help support the spiralling USD.