• Indian Rupee (INR) rises tracing equities higher even as RBI warns of bubble
  • Unemployment rose sharply in May to 10%
  • US Dollar (USD) edges lower after strong gains on Wednesday & ahead of data dump
  • US GDP, initial jobless claims & durable goods in focus

The US Dollar Indian Rupee (USD/INR) exchange rate is heading southwards on Thursday for a third straight session. The pair settled -0.1% lower on Wednesday at 72.72. At 10:00 UTC, USD/INR trades -0.2% lower at 72.56.

The Rupee continues to strengthen tracing domestic equities higher for another session. The Sensex and the Nifty 50 both closed on a firmer footing. The move higher in the stock market came despite the Reserve Bank of India warnings.

The central bank warned that the recent surge in domestic equities, despite an 8% contraction in FY21 GDP poses risks of a bubble.

Elsewhere, India’s unemployment could cross 10% with an estimated 10 million jobs lost in May. This was significantly higher than in April when unemployment reached 7.97% at 7.35 million. The substantial loss in employment comes as the country continues to battle the resurgence of covid.

Separately the RBI noted that the rival in private consumption was key for the post covid recovery which depends on the speed at which the second wave can be brought under control.

The US Dollar is trading lower across the board on Thursday.  The US Dollar Index, which measures the greenback versus a basket of major currencies trades -0.03% at the time of writing at 90.00 after booking 0.5% gains in the previous session.

The US Dollar rose on Wednesday after Federal Reserve Governor Randal Quarles opened the door to discussions surrounding the tapering of bond purchases when conditions were right. The Dollar seized on the very subtle shift in his language and charged higher. The comments reflected the slight hawkish shift seen in the minutes to the April FOMC minutes.

Looking ahead there is plenty of data for investors to focus on, including a potential upward revision to the Q1 GDP reading. Jobless claims are expected to hit a pandemic low. Strong data could fuel inflation expectations and drive the US Dollar higher.