- Indian Rupee (INR) trends lower for a 4th straight session
- Oil gains an additional 3% taking gains this week to 13%
- US Dollar (USD) struggles for direction on Veterans Day
- Vaccine breakthrough optimism s being offset by surging covid cases
The US Dollar Indian Rupee (USD/ INR) exchange rate is pushing higher for a fourth straight session on Wednesday. The pair settled +0.34% on Tuesday at 74.28. At 12:15 UTC, USD/INR trades +0.15% at 74.38.
The Rupee ended lower on Tuesday despite the Indian equities market hitting an all time high. The Nifty managed to close over the 12,600 level whilst the Sensex hit a record high of 43316 amid an upbeat mood in the market following the Pfizer vaccine announcement earlier in the week.
Oil prices remain a drag on the Rupee. West Texas Intermediate has surged over 13% so far this week, with 3% gains being booked today as investors focus on the medium-term outlook and improving future demand. Near term concerns over rising covid cases and the short-term impact to oil demand as lockdowns rise is being brushed off, at least for now.
Separately, India’s government have approved a proposal to spend $27 billion over 5 years to create jobs and boost manufacturing. The incentives, the cabinet agreed, will be handed out to manufacturers in 10 sectors including automobiles, auto parts, textiles, pharmaceuticals and food producers among others in order to attract investment. The move is part of a broader plan to create “champion” sectors in Indian to attract investment and to help India on its path to become self-reliant.
On the other hand, the US Dollar is struggling for direction versus its major peers on Wednesday, which is Veterans Day, and the bond market is closed. This is limiting activity in the foreign exchange market considerably. Furthermore, there is no high impacting US economic data to drive movement in the greenback.
Given the absence of any fresh catalysts, investors will continue digesting Pfizer’s vaccine breakthrough news, coupled with the soaring number of covid cases in the US. New daily cases have now reached over 100,000 for the seventh consecutive day as the third wave shows no signs of letting up.