- Indian Rupee (INR) edges higher after two days of losses
- IMF forecasts -10.3% GDP contraction in 2020, following by 8.8% GDP growth next year
- US Dollar (USD) trades higher versus major peers on safe haven flows
- 2 covid vaccine trials have been paused on safety ground
The US Dollar Indian Rupee (USD/INR) exchange rate is trending lower on Wednesday, snapping a two-day winning streak. The pair settled up+0.05% on Tuesday at 73.40. At 10:15 UTC, USD/INR trades -0.16% at 73.27.
The International Monetary Fund forecast that the Indian economy would contract by -10.3% this year after being severely hit by the coronavirus lockdown. However, the IMF was also upbeat regarding its recovery saying that India was well placed to start recovering from the crisis with the government supporting both fiscally and through monetary policy.
The IMF forecast that India will bounce back in 2021 with economic growth in the region of 8.8% if the government take certain measures and ramp up its efforts in certain areas.
The outlook updates from the OMF comes as it predicts a less severe global economic contraction in 2020 of -4.4%, upwardly revised from -4.9%. However, the IMF downgraded growth in emerging markets, excluding China, from -5% to -5.7% this year.
Separately, according to data released by the commerce and industry ministry, Indian Wholesale price index (WPI) inflation rose 1.32% in September, up from 0.16% in August.
The US Dollar traded lower versus the Indian Rupee, however it traded higher versus its major peers as risk off trading dominated. News that two advanced Covid-19 vaccine candidate trials were being paused for safety reasons unnerved investors.
Johnson & Johnson announced they were pausing their programme after an unexplained illness in a participant. Eli Lilly & Co also announced that it is pausing the clinical trial of its covid antibody treatment, also on safety concerns. This means the timeline for a vaccine is being pushed out.
The US Dollar is also being lifted by the lack of progress towards a US fiscal stimulus bill.
The US economic calendar is quiet. Producer price index data will provide further clues on inflation at wholesale level.