- Indian Rupee (INR) under pressure after 3 days of gains
- Domestic equities close lower
- US Dollar (USD) rises across the board
- Retail sales fall -0.7% MoM in December
The US Dollar Indian Rupee (USD/INR) exchange rate is edging higher on Friday, snapping three straight days of declines. The pair settled -0.1% on Thursday at 73.07. At 13:15 UTC, USD/INR trades +0.05% at 73.11. Despite the slight tick higher today, the pair is on track to decline -0.3% across the week.
Risk off trading is driving the financial markets ahead of the weekend. Rising covid numbers and tighter lockdown restrictions are dominating the market narrative, particularly in light of increasing cases in China. With risk off dominating, demand for riskier assets and currencies such as the Indian Rupee has declined, whilst demand for safe havens such as the US Dollar is on the rise.
Reflecting the downbeat mood, Indian domestic equities closed the day lower. The benchmark Nifty 50 settled -0.5%, whilst the Sensex also shed -0.4%.
On the data front, India’s trade deficit in goods widened to $15.44 billion in December. Imports rose to $42.59 billion, boosted by a surge in gold imports.
Meanwhile, the US Dollar is pushing higher across the board. The US Dollar Index, which measures the US Dollar versus 6 major currencies trades +0.3% at the time of writing.
US economic data has pointed to a deterioration in the health of the US economy. US retail sales declined -0.7% month on month in December, this was significantly below the 0% monthly change expected.
Retail sales fell for a third straight month in December as the surge in covid kept people away from stores in the key holiday period. The report came following yesterday’s disappointing initial jobless claims figures which shoed that claims surged to a 5 month high of 965,000. The data suggests that rising infections are forcing businesses to cut back and lay off workers.
The data boosts the case for Joe Biden’s $1.9 trillion stimulus package announced last night.