- Indian Rupee (INR) rises as risk appetite grows
- World Bank warns of -9.5% contraction in Indian economy this year
- US Dollar (USD) trades lower as Trump softens tone on US covid relief aid
- US jobless claims in focus
The US Dollar Indian Rupee (USD/INR) exchange rate is extending losses for a second straight day on Thursday. The pair settled -0.14% lower in the previous session at 73.30 near the low of the day. At 10:15 UTC, USD/INR trades -0.1% at 73.24.
The World Bank warned that South Eastern Asian economies were facing their worst ever recession. The WB forecasts a -7.7% contraction in the region this year with workers in the informal sector set to be hit the hardest.
India, the region’s largest economy is expected to see GDP contract by -9.5% this year according to the WB. The report also highlighted that the impact could still be worse than forecast as coronavirus infections continue to surge, making foreign investors wary. This is turn limits the governments ability to boost spending.
India has recorded 6.84 million cases of covid, only second to the US, even though the country went into one of the world’s strictest lockdowns in the initial March period
Despite this news the Indian Rupee is manging to advance thanks to a risk on mood in the broader financial markets. Riskier assets and currencies such as the Indian Rupee are in favour as investors cheer a softening of stance by President Trump towards additional US fiscal stimulus.
Earlier in the week, President Trump pulled the plug on bipartisan stimulus talks, until after the election. However, he appears to be back tracking. Both Trump and House Speaker Nancy Pelosi support the idea of smaller standalone bills which are more targeted to specific areas of the economy.
The softening of stance by the President, in addition to agreement between the two sides on the broad idea is boosting optimism that some form of fiscal stimulus is on the way.
Investors will now turn to US jobless claims data later today for further insight into the health of the recovery.