- Indian Rupee (INR) rebounds on weaker USD
- Oil extends rally
- US Dollar (USD) falls after Fed Powell’s calming testimony
- Fed speakers and PMI data in focus
The US Dollar Indian Rupee (USD/INR) exchange rate is slipping lower on Wednesday after two straight days of gains. The pair settled +0.27% on Tuesday at 74.33. At 11:00 UTC, USD/INR trades -0.33% lower at 74.23.
The Indian Rupee is strengthening on Wednesday, even as domestic equities declined and oil prices surged to fresh multi -year highs.
The Sensex closed -0.5% lower whilst the Nifty 50 closed -0.14%. Declines in technology stocks outweighed gains in automakers.
Covid cases are slowing and pandemic restrictions are being eased which is boosting sentiment surrounding the Rupee. High daily vaccine numbers are also supporting demand for the Indian currency.
Meanwhile oil prices hit fresh multi-year highs as the demand outlook continued to improve and inventories declined. API data revealed a -7.5 million draw in crude stock piles.
The US Dollar is edging lower across the board on Wednesday. The US Dollar Index, which measures the greenback versus a basket of major currencies trades -0.02% at the time of writing at 91.72 extending losses for a third straight session.
The US Dollar is trading lower following calming words from Federal Reserve Chair Jerome Powell in the previous session. In his testimony before Congress Fed Chair Powell once again reassured that the recent spike in inflation was transitory. He also insisted that the Fed would not raise rates pre-emptively. The data, particularly labour market data needs to improve considerably before the Fed look to start tightening policy.
Fed Powell’s comments were repeated by influential New York Fed President John Williams, who sees any tightening of monetary policy as still a long way off.
The comments come after the Federal Reserve unexpectedly projected two interest rate rises in 2023 in its policy meeting last week.
Looking ahead, more Federal Reserve members will be speaking across the US session. US PMI data will also be in focus.