inr-bank-notes - INR
  • Indian Rupee (INR) builds on gains as market mood improves
  • Chinese trade data beats forecasts
  • US Dollar (USD) steady as stimulus hopes grow
  • Biden, Fed Powell and US jobless claims in focus

The US Dollar Indian Rupee (USD/INR) exchange rate is falling lower on Thursday, extending losses for a third straight session. The pair settled -0.08% at 73.16 on Wednesday. At 11:55 UTC, USD/INR trades -0.13% at 73.06.

The Indian Rupee is advancing amid a risk on mood in the market. Strong Chinese trade data overnight has boosted optimism surrounding the global economic recovery, whilst hopes are growing for huge additional fiscal stimulus from the Joe Biden administration.

Chinese exports grew by more than expected in December as covid disruptions globally fuelled demand for Chinese goods. Exports jumped 18.1% in December compared to a year earlier beating forecasts of 15%.  Meanwhile imports rose 6.5% year on year in December, beating forecasts of 4.5% growth.

China is expected to be the only major economy to see positive growth in 2020 helped by strong global demand for exports.

The upbeat data has lifted sentiment, boosting demand for riskier assets and currencies such as the Indian Rupee.

Adding to the upbeat mood, are growing expectations that the Joe Biden administration will bring huge additional stimulus to support the US economy.

President -elect Joe Biden is expected to announce a $2 trillion stimulus package later today; a significant increase from the already Congress approved $900 billion relief package.

Massive stimulus expectations are lifting the prospects of a stronger US economic recovery this year. Investors are also starting to consider that the Federal Reserve could start tapering its bond buying programme sooner than initially expected.

Fed Chairman Jerome Powell is due to speak later. Investors will be listening for any clues over the Fed’s next steps and the possible tapering of bond purchases which could provide fresh impetus for the US Dollar.

US jobless claims are also due to be released and are expected to stabilize below 800,000 as the US economy struggles with rising covid cases.