- Indian Rupee (INR) is under pressure as covid cases soar globally
- Indian soon to take over US with most infections as festival season approaches
- US Dollar (USD) rises on safe haven flows as US stimulus fails to materialise
- Jobless claims in focus, 825,000 new claims expected
The US Dollar Indian Rupee (USD/INR) exchange rate is pushing higher paring losses from the previous session. The pair settled -0.2% lower on Wednesday at 73.24 close to the low of the day. At 09:15 UTC, USD/INR trades +0.2% at 73.41.
The Indian Rupee is out of favour amid a broad risk off mood in the market. With coronavirus cases rising sharply across the globe, authorities are tightening lockdown measures in a bid to stem the spread of the virus.
India is already on track to overtake the US with the world’s highest number off covid-19 infections. Indian is expecting a surge in the number of infections over the coming weeks as it heads towards its main holiday season, with few lockdown restrictions in place.
The government is reluctant to place restrictive measures on India given the desperate state of the economy. The Hindu festival of Durga Puja which is celebrated next week and Diwali which is celebrated in mid-November are two big money-spinning festivals.
The fear is that there could be more deaths from poverty and starvation than from the virus itself.
India has reported 7.2 million covid-19 cases and more than 110,000 deaths.
As risk aversion dominates investors are moving out of riskier assets and currencies such as the Indian Rupee and are instead moving into safe havens such as the US Dollar.
Adding to the sour market mood is the absence of a new fiscal stimulus covid relief package. The US Democrats and Republicans have failed to make headway in negotiations over the past few days. Despite recent optimism, it looks as if an agreement won’t be reached until after the US elections.
Looking ahead, investors will tun their attention to the US jobless claims data release. 825,000 initial claims are expected, this is only down 15,000 from the previous week, highlighting the stalling nature of the labour market recovery.