- Indian Rupee (INR) rises tracing equities higher as reopening optimism builds
- Barclays downgrades India’s GDP to 9.2% growth
- US Dollar (USD) declines versus majors as Fed remains dovish
- US consumer confidence declined for 1st time in 6 months
The US Dollar Indian Rupee (USD/INR) exchange rate is extending losses for a second straight session on Wednesday. The pair settled -0.05% lower on Tuesday at 72.79 around the low of the day. At 11:00 UTC, USD/INR trades -0.09% lower at 72.72.
The Rupee is strengthening, refreshing two-month highs boosted by falling covid numbers and a bullish equities market.
Both the Nifty 50 and the Sensex powered higher again on Wednesday, supported by financials and IT stocks.
The mood towards Indian assets has improved as covid cases are at the lowest in a month and optimism is building surrounding the easing of pandemic restrictions.
Investors have shrugged off news that Barclays Bank cut its full year 2021/22 economic growth forecast for India by 80 basis points. The banks cites the toll from the latest covid restrictions as the reason for cutting growth forecasts to 9.2%.
The bank commented that although the second wave was receding the economic costs have been greater. The bank had forecast 11% growth prior to the second wave, which it then downgraded to 10% before today’s additional downgrade.
The US Dollar is trading lower versus the Rupee. However, it is ticking a few pips higher versus its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies trades +0.08% at the time of writing at 89.70 after hitting a 5-month low in the previous session.
The US Dollar continues to trade at multi-month lows as more Fed officials stuck by the dovish stance on Tuesday. Inflation concerns have been lingering in the markets for a while. However, the US Federal Reserve is unwavering in its belief that the rise in prices is transitory. This means that the Fed is likely to keep interest rates low for longer.
US consumer confidence data revealed that household morale slipped slightly in May, adding pressure to the greenback. Consumer confidence declined for the first time in 6 months as euphoria surrounding the economic reopening started to fade.
There is no high impacting US data due to be released today.