• Indian Rupee (INR) advances despite covid crisis
  • Domestic equities close marginally lower
  • US Dollar (USD) falls versus major peers
  • US ISM manufacturing unexpectedly dropped

The US Dollar Indian Rupee (USD/INR) exchange rate is trading lower on Monday, extending losses from the previous week. The pair lost -1.53% across last week settling at 74.05. At 16:00 UTC, USD/INR trades -0.2% at 73.89.

The Rupee continued to advance despite the ongoing covid crisis and a slight dip in equities. Even so volumes are low owing to the May Day Bank Holiday in parts of China.

Daily covid cases in India showed a very marginal improvement with 368,147 new daily cases, however the situation remains dire. Furthermore, vaccinations are plummeting with just 12% of the 1.35 billion fully or partially vaccinated.

Meanwhile the Sensex closed 0.1% lower and the Nifty 50 closed flat.

Looking ahead, the key data releases this week for the Rupee are likely to be consumer price index and the industrial price index.

The US Dollar is falling versus the Indian Rupee and versus its major peers on Friday. The US Dollar Index, which measures the greenback versus a basket of major currencies trades -0.4% at the time of writing at 90.90.

The US Dollar came under pressure after disappointing manufacturing PMI numbers. The closely watched ISM manufacturing PMI unexpectedly dropped sharply in April after a strong first quarter. The PMI came in at 60.7, well down from March’s 64.7 and short of the 65 that analysts had forecast.

The slow down in manufacturing has been caused by widespread shortages of parts, material & labour and threatens to put the brakes on the economic recovery. Even so, it is worth noting that any reading over 60 is still exceptional.

This year has been a surprisingly strong year for US manufacturing which has helped to drive the economic recovery.

Whilst there is no more data due today, investors will look ahead to US factory order due tomorrow.