• Indian Rupee (INR) holds steady despite Covid cases surging
  • Oil prices slide extending last week’s losses
  • US Dollar (USD) pulls back versus majors as yields falls
  • US yields fall after soothing words from the Fed

The US Dollar Indian Rupee (USD/INR) exchange rate is inching lower on Monday, extending losses from the previous week. The pair shed -0.38% across the previous week settling on Friday at 72.40. At 15:22 UTC, USD/INR trades -0.03% at 72.37.

The Rupee is falling to capitalize on the weaker US Dollar amid rising covid cases unnerving investors. Domestic equities failed to provide guidance for the Rupee finishing flat on the day as defensive stocks offset losses in financials.

The Nifty 50 closed flat on the fay whilst the Sensex ended 0.2% lower.

The surge in covid cases to over 40,000 the highest level in almost 4 months is unnerving investors. Tighter restriction and lockdown measures are starting to be enforced, particularly in the state of Maharashtra, which is the richest state and also considered the economic backbone to the country. This state has seen more than half of the recent surge in covid cases.

Oil prices were offering some support to the Rupee. West Texas Intermediate trades – 0.3%, extending over 6% losses from the previous week.

The US Dollar is edging marginally higher versus the Rupee but trades a few pips lower versus its major peers. The US Dollar index Index which gauges the greenback versus a basket of 6 majors, trades -0.13% at 91.80 at the time of writing, extending gains from the previous session.

The US Dollar is tracing US treasury yields lower. The yields on the benchmark 10 year treasury fell -3.3% to 1.67%, significantly off last week’s 14 month high of 1.75% after US Federal Reserve policy makers soothed the bond markets over the weekend.

Federal Reserve Chair Powell wrote in the Wall Street journal that “the recovery in the US economy is far from complete” and that the Fed remain accommodative, supporting the economy.

Richmond Fed President Thomas Barkin also said in an interview that there were no signs of undesirable inflation.