- Indian Rupee (INR) and Indian equities slump on risk off trade
- New more infectious covid strain raises fears of tighter lockdown restrictions globally
- US Dollar (USD) Index +0.9%
- US Congress to vote through stimulus deal
The US Dollar Indian Rupee (USD/INR) exchange rate is advancing at the start of the week, extending gains from Friday. The pair closed +0.07% higher on Friday at 783.57. However, across the previous week the pair traded -0.2% lower. At 11:00 UTC, USD/INR trades +0.6% at 74.02 at the high of the day.
Risk sentiment has taken a hit at on Monday as investors react to news of a more infectious covid strain spreading across the UK. Riskier assets and currencies such as the Indian Rupee are out of favour.
Indian shares saw their worst trading day in 7 months in a broad sell off, with global equities following suit. The UK health security said that the spread of the new strain was out of control. A growing number of countries are closing their borders with the UK. Investors fear that the strain will spread causing tighter lockdown restrictions across the globe.
The Indian Nifty 50 closed 3.1% lower wiping out 6 straight sessions of gains. Meanwhile the Sensex fell 3%.
Tumbling oil prices were offering some support to the Rupee. Oil prices tanked on fears that the new covid strain will hit demand. At the time of writing West Texas Intermediate trades -5.7% at $46.40.
The US Dollar is rising sharply higher as investor as seek out its safe haven properties. The US Dollar Index which measures the greenback versus 6 major peers trades +0.9% higher rebounding firmly from 2.5 year lows hit last week.
The risk off mood is overshadowing developments in Congress over a US covid rescue package. Democrat and Republican negotiators agreed to a $900 billion package on Sunday, which is expected to be easily voted through both the House and the Senate later today.
There is no high impacting US data due for release today, sentyiment ios expected to continue driving the greenback.