- Indian Rupee (INR) strengthens, building on gains from the past 7 weeks
- Domestic equity markets hit fresh record highs
- US Dollar (USD) declines on safe haven outflows
- US Manufacturing in focus ahead of Tuesday’s senate vote in Georgia
The US Dollar Indian Rupee (USD/INR) exchange rate is ending lower at the start of the new year and the new week. The pair trades -0.1% at 73.03, extending losses from the previous week. USD/INR shed -0.6% across the previous week in its seventh straight week of losses.
The Indian Rupee has strengthened thanks to broad weakness in the US Dollar and as it tracks domestic equity markets higher. Indian shares recorded closing highs on Monday for a second straight session after emergency use approval was given to two covid vaccines in India over the weekend. The huge immunization programme is expected to start next week.
The Nifty 50 closed 0.8% higher at 14132 while the Sensex gained 0.6% to 48176 in its first close above 48,000.
Adding to the upbeat mood data revealed that India’s factory sector ended a tough 2020 on a stronger footing. The Nikkei Manufacturing PMI rose to 56.4 in December, up from 56.3 in November. The level 50 separates expansion from contraction.
Manufacturing has been one of the main factors driving the economic recovery in India following the pandemic slump after business activity contracted 23.9% in April – June period. The latest data suggests that the Indian economy remains on the path to recovery.
The US Dollar is trending lower on Monday amid optimism surrounding the global economic recovery as covid vaccines are tolled out. The risk on mood hurt demand for the safe haven currency and the US Dollar Index trades -0.5% at the time of writing hitting fresh multi year lows.
This week is a busy week for the US Dollar with US manufacturing PMI data due later. The Senate vote in Georgia tomorrow will also be closely watched. Should the Democrats win the two seats the Republicans will lose their majority in the Senate. Later in the US non farm payroll will in focus.