• S&P rating agency expects -9% contraction this fiscal year vs, -5% previously
  • India’s covid cases +94,372 in 24 hours
  • US Dollar trades lower versus major peers after AstraZeneca covid trials restart
  • US FOMC monetary policy decision on Wednesday

The US Dollar Indian Rupee (USD/INR) exchange rate is extending gains from the previous week. The pair advanced +0.19% last week, settling on Friday at 73.43. At 10:30 UTC, USD/INR trades +0.1% at 73.49.

International ratings agency S&P Global Rating forecast that the Indian economy will contract by 9% in the current fiscal year ending March 31 2021. This is greater than the previously expected 5% contraction, as the country countries to be devastated by the coronavirus pandemic.

S&P joins a growing list of major banks who have recently cut their forecast on India’s economy, which experienced a 23.9% GDP contraction in the April – June quarter. Consumer spending, exports and investments collapsed during the strict lockdown and have been slow to pick up since. As long as the spread of coronavirus remains uncontained, consumers will be wary about going out to spend.

Whilst India is out of national lockdown, local lockdowns and restrictions continue as the number of daily coronavirus cases rose by 94,372, taking the total to 4.85 million. India is experiencing the greatest number of new daily cases in the world and now sits only second to the US for greatest total number of infections.

The US Dollar is rising versus the Rupee; however it is trading lower versus its major peers in broad risk on trading. News that Oxford University/ AstraZeneca have resumed covid vaccine trials is booting sentiment, increasing flows out of the safe haven greenback. Vaccine trials for what is widely considered one the most promising vaccine candidates being tested globally saw trials briefly paused after a someone in the trial fell ill.

There is no high impacting US data due to be released today. Investors are looking ahead to the Federal Reserve’s monetary policy announcement on Wednesday.