- Indian Rupee (INR) supported by risk on trade
- Sensex & Nifty 50 close 2% & 1.8% higher respectively
- US Dollar (USD) declines on dovish Fed Powell
- Fed Chair Jerome Powell to testify again
The US Dollar Indian Rupee (USD/INR) exchange rate is edging lower for a sixth straight session on Wednesday. The pair settled -0.08% lower on Tuesday at 72.38. At 11:15 UTC, USD/INR trades -0.10% at 72.32.
According to the latest Reuters poll, the Indian economy is expected to have returned to growth in the December quarter amid the continued easing of covid restrictions.
Expectations are for 0.5% growth after the Indian economy contracted 23.9% and 7.5% in the April – June and July – September quarter. The same poll taken 2 months earlier predicted a 2% contraction.
Domestic equities rallied on Wednesday with the Sensex closing 2% higher, whilst the Nifty 50 closed 1.8% higher tracking global equities higher in risk on trade.
The US Dollar is trading lower versus the Rupee and against its major peers. The US Dollar Index which gauges the greenback versus a basket of 6 major peers trades -0.05% at the time of writing.
Demand for the US Dollar softened after Federal Reserve Chair Jerome Powell’s testimony before Congress on yesterday. A dovish testimony from Jerome Powell sent investors out of the US Dollar and towards riskier currencies such as the Indian Rupee.
The Fed Chair repeated that the US interest rate will remain low for some time. He confirmed that the Federal Reserve will continue buying bonds to support the US economy even though Congress looks set to agree on the Biden administration’s $1.9 trillion covid support package in the coming days.
Jerome Powell pointed out that the central bank’s goals of 2% inflation and strong employment were still some distance from being achieved.
Today there is no high impacting US data. However, Jerome Powell will be testifying for a second day before Congress.