- Indian Rupee (INR) surges as manufacturing sector continues to grow
- Manufacturing PMI hit 58.9
- US Dollar (USD) pares earlier gains as market mood improves
- US manufacturing PMI in focus ahead of tomorrow’s elections
The US Dollar Indian Rupee (USD/INR) exchange rate is slipping lower at the start of the new week, paring some of the gains from last week. The pair rallied 1% last week closing on Friday at 74.54, towards the high of the week. At 12:15 UTC, USD/INR trades -0.1% at 74.46.
India’s factory activity expanded at the quickest pace in over 10 years in October as both demand and production continued to rebound from covid related disruptions. The Nikkei Manufacturing PMI compiled by IHS/Markit hit 58.9 in October, up from 56.8 in September. This was the highest reading since My 2010 and significantly above the level 50 which separates expansion from contraction.
Delving deeper into the numbers, new orders continue to show signs of recovery as companies believe that the resurgence in sales will be sustained in coming months. Both output and new orders which track demand, rose at the steepest rate in over 12 years. Foreign demand was a key driver. Even so firms cut staff for a seventh straight month suggesting that any consumer recovery could still be some time off.
The data shows that India, Asia’s third largest economy is starting to recover after contracting a record -23.9% in the April – June period. The economy is in recovery mode after the government removed covid lockdown restrictions even though the number oof cases continue to grow daily, hitting 8 million.
The US Dollar was slightly lower versus the Indian Rupee although it traded flat versus its major peers paring gains from earlier in the session as mood in the market improved significantly. Covid fears are taking a back seat, even though cases are soaring. Instead investors are looking towards tomorrow’s US Presidential election.
Joe Biden has been leading in the polls, however key swing states are showing the gap narrowing.
Prior to the election, investors are looking towards US manufacturing PMI which is expected to show that the sector continued to expand in October.
