- Indian Rupee (INR) extends gains
- Rising oil prices could cap gains
- US Dollar (USD) declines after weaker than expected CPI data
- Federal Chair Powell to speak later
The US Dollar Indian Rupee (USD/INR) exchange rate is trending lower Wednesday for a second straight day. The pair settled -0.1% lower on Tuesday at 72.85 a level last seen on 2nd March 2020. At 14:15 UTC, USD/INR trades -0.1% at 72.79 a fresh 11 month low.
The Rupee is strengthening versus the greenback despite a lackluster performance in the domestic equity market. The benchmark Sensex index close 30 points lower at 51,309. The Rupee continues to see strength from the recent annual budget. The Rupee is also being boosted by the upbeat mood in the market which is lifting emerging markets across the board.
The Indian government’s recent budget for the fiscal year 2021 pleased equity buyers amid the promise of extra spending and a huge covid vaccination programme.
The rising price of oil could keep gains in the Rupee in check. Oil is extending gains for an eighth consecutive session. West Texas Intermediate trades +0.5% at $58.50, boosted by US stimulus optimism, rapid vaccine deployment lifting the global demand outlook and OPEC+ keeping market conditions tight. API inventory data beat forecasts. EIA inventory data is due later.
The US Dollar is trading on the back foot across the board amid US stimulus optimism and after inflation data disappointed. US consumer price index remained unchanged in January at 0.3% for a second straight month, highlighting the pandemics lingering restraint on inflation.
The Core CPI, which excludes more volatile items such as food and fuel increased 0.2% month on month, less than the 0.3% expected. The weaker reading dragged on the value of the USD.
Meanwhile, lawmakers continue to debate the size and timing of the Democrats proposed $1.9 trillion covid stimulus bill.
Looking ahead there is no more economic data due to be released. Instead, all eyes will be on a speech by Federal Reserve Chair Jerome Powell.