indian-rupee-bank-notes - INR
  • Indian Rupee (INR) trades lower in risk off trade
  • IMF warns that global economic growth is showing signs of slowing
  • US Dollar (USD) advances on risk flows
  • US initial jobless claims unexpectedly rise

The US Dollar Indian Rupee (USD/INR) exchange rate is pushing higher on Thursday, paring some losses from the previous session. The pair settled -0.5% lower on Wednesday at 74.11.  At 13:15 UTC, USD/INR trades +0.1% at 74.18.

Vaccine optimism has faded on Thursday as investors switch their focus back onto surging covid cases in the US and Europe. Risk appetite has taken a hit and investors are selling out of riskier assets and currencies such as the Indian Rupee and are buying into the US Dollar for its safe haven properties.

The IMF warned that the global economy faces a difficult path back from covid-19. There are signs of slowing momentum the IMF said, particularly from the countries where covid cases are rising.

Last month the IMF forecast a contraction of -4.4% in the global economy 2020 with the global economy expected to rebound by 5.2% in 2021. However, the IMF also said that the outlook for many emerging markets had worsened.

Adding to the risk off mood, the number of Americans filing for unemployment benefits unexpectedly rose as the rising number of covid cases and tightening restrictions meant that there was a fresh wave of layoff hitting the labour market recovery.

US initial jobless claims rose to 742,000, up from 711,000 the previous week. Analysts had expected 707,000 new initial claims.

The surge in covid cases across the US comes whilst Congress remains deadlocked over an additional rescue bill.  With lockdown restrictions tightening and Congress failing to make any progress over an additional fiscal stimulus bill, it is likely that the Federal Reserve will need to step in again to ease monetary policy in order to support the economy. Speculation is growing that the US central bank will expand its bond buying programme in December.