- Indian Rupee (INR) ranked bottom for Asia’s currency ranking
- RBI expected to continue US Dollar purchases
- US Dollar (USD) trades lower versus majors on risk outflows
- Jobless claims +900,000
The US Dollar Indian Rupee (USD/INR) exchange rate trades higher on Thursday after paring some of the losses from the previous session. The pair settled -0.4% at 72.90 on Wednesday. At 16:45 UTC, USD/INR trades +0.1% at 72.98.
The Reserve Bank of India recently signalled that it wouldn’t ease back on US Dollar purchases. The RBI’s buying action pushed the India Rupee to the bottom of the list for Asia’s currency ranking in 2020. Analysts had believed that the RBI would slow purchases this coming year after its foreign currency stockpiles rose to record levels.
However, RBI Governor commented that emerging markets need to build foreign reserves as buffers from external shocks. Suggesting that this year could see more of the same. India is on the US currency manipulation watchlist after re-joining in December due to its persistent forex purchases.
Despite rising versus the Indian Rupee the US Dollar in trending lower versus its major peers. The US Dollar index, which measures the greenback versus 6 major peers trades -0.25% at the time of writing at 90.26, having picked up from a low of 90.05
The US Dollar trended lower in risk on trade. The upbeat mood in the market from rising stimulus optimism sapped demand for the greenback.
Hopes that President Biden’s $1.9 trillion covid stimulus package will quickly be pushed through over shadowed weaker data.
Data revealed that 900,000 Americans filed for unemployment benefits for the first time last week. This was down slightly from 965,000 recorded the previous week but remains elevated as businesses struggle under the covid restrictions.
There is no more data due today. Investors will focus on Biden and his first actions as he steps into office.