- Indian Rupee (INR) rises from pandemic recession
- Indian GDP expected to expand in Oct – Dec 2020
- US Dollar (USD) traces Treasury yields higher
- FOMC meeting minutes due tomorrow
The US Dollar Indian Rupee (USD/INR) exchange rate is edging higher on Tuesday for a second straight session. The pair gained 0.05% on Monday settling at 72.61. At 14:15 UTC, USD/INR trades +0.36% at 72.89.
Following 2 straight quarters of contraction, India’s GDP is expected rebound back into growth territory in October – December 2020 period, compared to a year earlier.
A combination of private consumption and government spending will help the economy expand in the December quarter by 0.7% according to Icra Ratings.
The Indian economy contracted by 25% in the June quarter and by 7.5% in the September quarter of the current fiscal year.
The upbeat forecast would indicate that the Indian economy has risen out of the pandemic induced recession.
After a weaker start the US Dollar has rebounded versus its major peers. The US Dollar Index, which measures the green back versus its 6 major peers trades +0.1% at the time of writing, after recovering from a three-week low hit earlier in the session.
Investors are starting to price in a strong economic recovery amid a rapid vaccine rollout programme and rising expectations of a huge US fiscal stimulus package. US treasury yields have risen to their highest level since March, boosting the greenback.
Looking ahead the US economic calendar is quiet today. Tomorrow sees the release of the minutes from the January FOMC meeting. Investors will be scrutinizing the minutes closely for any clues as to the Fed’s next move and when it could start tapering support. US retail sales are also due to be released tomorrow and could provide some fresh direction for the greenback.