- Indian Rupee (INR) trends higher for second day on greenback weakness
- Foreign investors net buyers on Indian stock exchange
- US Dollar (USD) falls across the board as fears grow over stability of the US economic recovery
- US consumer sentiment & personal expenditure data due
The US Dollar Indian Rupee (USD/INR) exchange rate is edging marginally lower on the final trading day of the week. The pair is extending losses after settling down -0.1% on Thursday at 74.87. At 10:30 UTC, USD/INR trades -0.08% at 74.82 after recovering from lows of 74.68.
The Indian Rupee is advancing however this is more of a US Dollar weakness story, than owing to particular Rupee strength. The US Dollar is under pressure on rising concerns over the health of the US economy and after President Trump suggested delaying this year’s Presidential elections.
The US Dollar index which tacks a basket of major currencies fell to a fresh 2 year low. This month has seen the biggest sell off in the US Dollar in over a decade.
Investors are increasingly concerned over the health of the US economy, as the recovery there is starting to show signs of slowing. Data revealed that the US economy contracted -9.5% quarter on quarter in the April – June period. This is a grim number that lays bare the impact of the coronavirus crisis.
Whilst data had been showing that the US economy was recovering, high frequency data is starting to show that the recovery is losing steam. US initial jobless claims increased compared to the previous week for a second straight week, whilst continuing claims are remaining elevated above 17 million.
Adding to the US Dollar’s woes were comments from President Trump, who suggested that the US elections should be postponed owing to the covid outbreak, a suggestion immediately criticised by the opposition Democrat party leader.
On the domestic equity market, the Sensex traded lower closing the week on Friday – 0.3%. However foreign institutional investors were net buyers, offering support to the Rupee.
Looking ahead US data will dominate trade across the US session with consumer sentiment and personal expenditure data due to be released. Further signs of the US economic recovery losing momentum could drag on the greenback further.