- Indian Rupee (INR) edges lower for second straight session
- Indian GDP -7.5% QoQ after -23.9% QoQ in previous quarter
- US Dollar (USD) declines versus major peers in low volume trade
- Optimism grows over US fiscal stimulus
The US Dollar Indian Rupee (USD/INR) exchange rate is advancing on Friday for a second straight session. The pair settled on Thursday +0.08% at 73.83. At 15:15 UTC, USD/INR trades +0.3% at 74.05. The pair is in line to book small losses across the week of 0.1%, adding to losses of 0.6% the previous week.
Indian’s economy shrank for a second straight quarter for the three months from July – September, although the contraction in the economy eased. The Indian economy shrank -7.5% QoQ compared to a -23.9% decline in the previous quarter. Analysts had been expecting -8.8% contraction in the economy.
Signs of a pickup in manufacturing and optimism surrounding a steady pick up in consumer demand could see the economy steadily recover over the coming months.
Prime Minister Narendra Modi expected the recent easing of farm and labour laws, in addition to tax incentives to boots manufacturing and attract more foreign investment going forward.
Consumer spending, the dominant driver of growth declined -11.3% year on year in the July – September period, an improvement on the -26.7% fall in the previous quarter.
The Reserve Bank of India is widely expected to keep interest rates on hold as its next policy review meeting next week.
The US Dollar is trending lower on Friday in quiet Thanksgiving trade. Whilst the US stock markets open for half a day today volumes are traditionally very low.
Even so the US Dollar is under pressure despite limited fundamental catalysts. There is no US economic data due to be released. Instead expectations of a large fiscal stimulus package from the new Joe Biden administration is pulling on the greenback.
Joe Biden has been clear that tackling covid is a priority. He has requested that Congress agree to a fical stimulus programme by the start of the new year when he takes office.