counting-inr-bank-notes - INR
INR bank notes
  • Fitch Solutions forecasts a mild weakening of Indian Rupee (INR)
  • India’s fiscal deficit to increase to 7% of GDP this fiscal year
  • US Dollar (USD) rises following treasury yields higher
  • US jobless claims & ISM non- manufacturing PMI in focus

The US Dollar Indian Rupee (USD/INR) exchange rate is on the rise on Thursday after finishing flat in the previous session. The pair settled on Wednesday at 73.11. At 11:15 UTC, USD/INR trades +0.3% at 73.4, at the top of the daily traded range.

Fitch Solutions revised lower its forecast for the Indian Rupee to 75.50 per US Dollar in 2021, from 77 previously expected. Fitch cited rising oil prices and worsening terms of trade as near term risks for the currency.

Separately, India’s fiscal deficit for the year ending March is expected to be over 7% of GDP as revenue collection took a hit from the lockdown conditions imposed to stem the spread of covid. This is significantly above the 3.5% projection from the government just last February.

The US Dollar is pushing higher versus the Rupee and its major peers on Thursday. The rise comes following a Democratic win in the Senate elections in the state of Georgia. For the first time in a decade the Democrats will control the house of representatives, the Senate and the Presidency in a so-called Blue wave.

A Blue wave will make it easier for President Joe Biden to push through his policies and legislation. Investors are betting on more stimulus; the prospect of additional stimulus has sent US Treasury yields higher lifting the US Dollar.

Investors have shrugged off the unprecedented invasion of Capitol Hill late yesterday, taking the view that the latest act of the Trump presidency was a passing phase that won’t impact on the transferring of power.

On the US economic calendar investors will be looking to the release of US jobless claims, Challenger job cuts and the ISM non-manufacturing PMI. These releases are lead indicators ahead of tomorrow’s key non-farm payroll report.