- Indian Rupee (INR) strengthens paring some of last week’s losses
- Rupee boosted solid manufacturing PMI 57.5
- US Dollar (USD) rises versus major peers on reopening optimism
- US ISM Mfg PMI beats forecast 60.8
The US Dollar Indian Rupee (USD/INR) exchange rate is edging lower on Monday, paring some gains from the previous week. The pair rallied +1.9% last week settling on Friday at 73.92. At 16:15 UTC, USD/INR trades -0.70% at 73.40.
Indian manufacturing PMI for February fell marginally to 57.5 down from 57.7 a month earlier, although it was in line with analysts forecasts. It also remains above the long running average. New orders expanded sharply although the employment subcomponent decreased further owing to the pandemic in a worrying sign.
The data comes following Indian GDP reading for the October – December quarter which was released on Friday. The numbers showed that the Indian economy pulled out of the pandemic recession and returned to growth.
The Indian economy grew 0.4% in the Oct – Dec quarter following -7.3% contraction in the previous quarter. According to the National Statistics Office the Indian GDP is expected to contract 8% in FY2020-21, more than the -7.7% forecast previously.
The US Dollar is falling versus the Rupee but is gaining versus its major peers. The US Dollar Index which measures the greenback versus 6 major peers trades +0.17% above the 91.000 mark at the time of writing.
The US Dollar is pushing higher after the US regulator, the FDA approved the Johnson & Johnson covid vaccine. This is the third covid vaccine to be approved in the US. However, it is the first single shot vaccine. As a result, the vaccine rollout is expected to speed up considerably and the US economy reopen more quickly.
The US ISM manufacturing PMI printed well ahead of forecasts at 60.8 points versus 58.6 expected. This was the fastest pace of expansion since the start of the pandemic as business leaders turn increasingly optimistic about the outlook for the US economy.
With the bond market calming attention can also shift to the Biden administration’s $1.9 trillion stimulus bill. This was successfully voted on by the House of Representatives over the weekend. It will now head towards the Senate who could vote on it as soon as Wednesday.