- Indian Rupee (INR) treads water, Reserve Bank of India expected keep rates unchanged
- RBI expected to provide guidance for the first time since February
- US Dollar (USD) eases back on an improved mood in the market
- Attention turns to tomorrow’s Trump – Biden live TV debate
The US Dollar Indian Rupee (USD/INR) exchange rate is trading flat as the new week kicks off, after finishing the previous week in the same way. The pair made no gains or losses on a weekly basis last week, closing on Friday at 73.68, roughly the same level that it had started the week at. At 10:15 UTC, USD/INR trades just a few pips lower at 73.66, in the middle of the daily traded range.
The Reserve Bank of India is expected to keep rates on hold at its upcoming policy meeting which is scheduled to take place 29th September – 1st October. However, it will provide guidance on the state of the economy and its performance amid the coronavirus pandemic. This will be the first time that for the first time since February that the central bank has provided guidance.
A Reuters poll of 66 analysts showed that all expect the repo rate to remain unchanged at 4%. The majority of analysts do not expect to see a rate cut until the January – March quarter, with the RBI likely to stay on hold until the end of 2021.
The RBI has so far slashed rates by 115 basis points since the start of the pandemic, as the economy contracted 23.9% last quarter, the worst performance on record.
The US Dollar is trending lower versus its peers amid an improved mood in the market. Optimism is growing that US lawmakers could agree a new fiscal stimulus deal prior to the US elections. US treasury Secretary Steve Mnuchin and House Speaker Nancy Pelosi agreed to restart formal discussions for a new fiscal stimulus package.
Recent data has indicated that the US economic recovery is starting to slow considerably. Additional stimulus could help keep the recovery chugging along.
Attention will now turn to the first US Trump – Biden live debate, due tomorrow.