inr-bank-notes - INR
  • Indian Rupee surged on Monday amid strong inflows from foreign investors
  • Indian equity markets muted
  • Risk on trading following constructive US – China trade talks weigh on the safe haven US Dollar (USD)
  • US consumer confidence expected to show a slight improvement in August

The US Dollar Indian Rupee (USD/INR) exchange rate is consolidating after a steep fall in the previous session. The pair plunged 1% on Monday, settling at 74.16 slightly up from the 5-month low of 73.96 struck earlier in the session.

At 10:15 UTC, USD/INR trades +0.08% at 74.22.

The Indian Rupee is pausing for breath after a stellar rally in the previous session. A strong equities market and rising bond yields supported the Rupee on Monday as did a reported half a billion-dollar purchase of Rupee’s by the US based asset managers Brookfield.

Brookfield has already committed to certain high value projects in India and yesterday’s inflow were reportedly part of that portfolio.

Today the Rupee is steady. Muted equities offered little inspiration. Both the Sensex and the Nifty 50 traded mildly lower. Foreign institutional investors were net buyers in the capital markets.

The US Dollar is mildly higher versus the Indian Rupee; however, it is under pressure versus its major peers amid in a risk on trading session. Thawing US – Sino trade tensions along with improving US coronavirus statistics are denting demand for the safe haven US Dollar.

In a biannual review US Trade Representative Robert Lighthizer and Chinese Vice Premier Liu He confirmed their commitment to the Phase 1 trade deal. Both China and the US showed a desire to cooperate despite tensions existing between the two sides over a broad range of other issues, such as data security and Hong Kong.  This willingness to cooperate calmed market fears.

Investors will now look to US consumer confidence data. Expectations are for an improvement in morale after July’s steep decline. Analysts forecast that Conference Board consumer confidence index will rise to 93 in August up from July’s 92.6, but still below June’s 98. A strong reading could help to lift the US Dollar.