- Indian Rupee (INR) extends losses on Maharashtra lockdown
- Daily covid cases top 168,000
- US Dollar (USD) trades subdued
- US CPI inflation due tomorrow
The US Dollar Indian Rupee (USD/INR) exchange rate is advancing for a fifth straight session on Monday. The pair rallied 1.8% across the previous week settling on Friday at 74.72. At 16:00 UTC, USD/INR trades +0.4% at 75.04, easing back slightly from 75.20 an 8 month high.
The Rupee trades under pressure as businesses in India’s richest state struggle under the latest harsh covid restrictions. As new daily cases surge beyond 168,000, India has over taken Brazil as the country with the second highest num er of covid cases after the US.
India’s richest state. Maharashtra, the home of India’s financial capital is the epi-centre of the resurgence. Non-essential shops, theatres, gyms and bar have been closed again, before they have had the opportunity to recover from the last nationwide lockdown.
Business activity in Maharashtra accounts for around 15% of the country’s GDP and is crucial for India’s economic recovery.
The US Dollar is trading higher versus the Rupee. However, the US Dollar Index, which measures the greenback versus a basket of major currencies trades -0.05% at the time of writing at 92.10.
The US Dollar is experiencing subdued trade on Monday, looking past upbeat comments from Federal Reserve Chair Jerome Powell over the weekend. Jerome Powell gave an optimistic assessment of the economic outlook for the US. However, he also reiterated that the Fed had no plans to tighten monetary policy soon. Jerome Powell also warned that the economy was at a key inflection point, stating that it was essential that the economy didn’t re-open too quickly. US covid cases have just started to creep up slowly despite vaccination numbers also rising.
Investors are in wait and see mode ahead of tomorrow’s US inflation data. Analysts are expecting inflation as measured by CPI to increase to 0.2% month on month in February, up from 0.1%. A strong reading could send the US Dollar higher.