- Indian Rupee (INR) edges lower despite Goldman Sachs upgrading GDP outlook
- Moody’s upwardly revised India’s GDP earlier in the week
- US Dollar (USD) trends lower versus major peers amid vaccine news & surging cases
- US retail sales expected to +0.5% MoM in October
The US Dollar Indian Rupee (USD/INR) exchange rate is advancing on Tuesday snapping a two-day losing streak. The pair settled 0.26% lower at 74.37 on Monday, at the lower end of the daily traded range. At 12:15 UTC, USD/INR trades +0.15% at 74.48.
Goldman Sachs upwardly revised India’s GDP growth for FY21 from -14.8% contraction initially forecast in September to 10.3%. The investment bank also predicts that India’s GDP will rebound 13% in the coming fiscal year as an effective vaccine could allow mobility to normalise by mid-2022 and with meaningful economic activity rebounding in 2021. Consumer facing service sectors are expected to pick up.
Earlier in the week Moody’s Investor Services also upwardly revised its forecasts for the Indian economy to an 8.9% contraction this calendar year, up from 9.6% contraction forecast just a few months earlier.
The latest data from India has been encouraging. The Industrial Production Index hit positive ground for the first time in 6 months in September, expanding 0.2%. Other data such as manufacturing PMI hit a 13-year record high, also pointing to a solid rebound in the economy.
The Reserve Bank of India expects the economy to contract 9.5% in the current fiscal year, although the central bank believes that the growth will return in the January – March quarter.
Despite US Dollar moving higher versus the Indian Rupee, it is trending lower versus its major peers. The US Dollar trends lower as investors continue to cheer Moderna’s vaccine news from the previous session, and as they digest surging covid cases stateside. Michigan, Washington and California have tightened lockdown restrictions in a bid to stem the spread of covid.
Attention will now turn to US retail sales data due for release later today. Analysts are expecting sales to have moderated slightly in October to a reasonable 0.5% after surging 1.7% in September.