- Indian Rupee (INR) tracks gains in domestic equities
- Oil heads lower on demand concerns
- US Dollar (USD) eases as investors look ahead to the US election
- A Blue Wave could drag on the US Dollar
The US Dollar Indian Rupee (USD/INR) exchange rate is extending losses on Tuesday. The pair settled mildly lower -0.06% on Monday at 74.51 snapping a three-day winning streak. At 11:15 UTC, USD/INR trades -0.1% at 74.39.
The Indian Rupee is tracking domestic equity market higher, whilst weaker oil prices also offer support.
Indian shares ended the day higher on Tuesday as banks and financial stocks extended their gains for a second straight session and sentiment remained firm after factory output data showed signs of recovering. The Nifty 50 closed 1.2% higher led by the banking index which jumped 3.1%, with HDFC, surging 3.9% on strong earnings.
Yesterday’s upbeat factory output data also added to the upbeat mood, with signs of demand recovering after the strict lockdown.
The price of oil is trending lower as more countries tighten lockdown restrictions the demand outlook is deteriorating rapidly. Furthermore, production in Libya is picking up rapidly.
A broad upbeat mood in the market is also offering support to the riskier Indian Rupee, whilst investors pull funds out of the safe haven US Dollar.
Investors full attention will now turn to the US elections with high volatility expected as the results start rolling in later.
Former Vice President & Democrat Joe Biden has been around 7 points ahead in the national polls for some weeks. However, the race is significantly tighter in key swing states and these are the states which decide the election.
If Joe Biden wins the keys to the White House, investors will be looking closely to see what happens in the Senate. Currently the Republicans hold a majority in the Senate. Should the Democrats win a “blue wave” and take control of the Senate, as well as having control of the House of Representatives, the chances of a huge stimulus package are greatly increased, which could pull the US Dollar lower.