• Indian Rupee (INR) advances amid risk on mood
  • Sensex & Nifty fit strike fresh record highs
  • US Dollar Index hits fresh multi year lows
  • US jobless claims & stimulus talks in focus

The US Dollar India Rupee (USD/INR) exchange rate is dropping lower on Thursday, paring gains from the previous session. The pair settled +0.1% on Wednesday at 73.64. At 11:15 UTC, USD/INR trades -0.1% at 73.56.

Rising optimism in the financial markets along with a weakening US Dollar is lifting the Rupee. Progress in US stimulus talks, Brexit nearing the endgame and vaccine rollout developments are boosting risk appetite. Surging market sentiment is lifting demand for riskier assets such as equities along with the Indian Rupee.

Indian shares once again closed at record highs on Thursday with gains in financials continuing a rally which has resulted in the benchmark indexes hitting record highs ion 18 of the last 27 sessions.

Both the Nifty 50 and the Sensex has posted weekly gains over the past 6 straight weeks boosted by foreign institutional investors which also aides gains in the local currency.

US Dollar weakness is also a key factor in the rise of the Rupee. The US Dollar Index which gauges the greenback versus its major peers trades -0.3% lower at multi year lows as investors shun its safe haven properties in search of riskier trades.

Attention remains very much on US Congressional stimulus package talks. Whilst no agreement has been reached so far, Democrat and Republican leaders are sounding more positive than they have for months boosting hopes of a deal before Christmas.

Separately the US federal Reserve kept interest rates unchanged at near 0 on Wednesday, in its last meeting of 2020. The central bank also committed to keeping monetary policy loose until more progress is made towards maximum employment and price stability. This is like to be around 2024.

Looking ahead US jobless claims will be in focus. Expectations are for initial claims to fall slightly from last week’s three month high of 853,000.