• Indian Rupee (INR) trades range bound in quiet trade
  • Indian equity markets ae closed for public holiday
  • US Dollar (USD) pares earlier gains as investors look ahead to US earnings
  • US FOMC rate decision tomorrow

The US Dollar Indian Rupee (USD/INR) exchange rate is holding steady on Tuesday for a second straight session. The pair settled just a few pips lower on Monday at 72.96. At 11:45 UTC, USD/INR trades at the same level of 72.96.

The Indian Rupee barely moved in quiet trade on Tuesday as the Indian debt and equity markets are closed in observance of a public holiday. They will resume trading on Wednesday.

The Indian Rupee shrugged off worsening Indian – Chinese relations on news that India has decided to retain its ban on Tik Tok and 58 other Chinese apps. The ban initially came into force in June with the Indian Ministry of Electronic and Information Technology then giving the Chinese companies the opportunity to explain their position on issues such as censorship and whether they worked on behalf of foreign governments. On reviewing the responses, an Indian government panel decided that no changes will be made to the current restrictions, raising tensions between the two powers.

Meanwhile the US Dollar is also trading flat versus its major peers as investors look cautiously ahead to a slew of US earnings. Big names such as Johnson & Johnson and Microsoft are due to report earnings today.

The first Federal Reserve monetary policy committee under the Joe Biden administration begins today and is set to conclude on Wednesday. The Fed is not expected the make any changes to policy even though recent US data has been noticeably  weaker and as pandemic risks remain elevated.

Nevertheless, the FOMC could adopt a slightly more optimistic stance as the Democrats now have control over Congress meaning that the prospects of more fiscal stimulus are much improved. Furthermore, with the vaccine deployment expected to pick up in the coming weeks the outlook for the recovery is starting to improve.