- Indian Rupee (INR) treads water amid cabinet reshuffle
- Fitch downgrades India’s growth outlook to 10%
- US Dollar (USD) holds gains from previous session
- US FOMC minutes & JOLTS jobless claims in focus
The US Dollar Indian Rupee (USD/INR) exchange rate is edging mildly higher for a second straight session. The pair gained 0.4% on Tuesday settling at 74.58. At 11:40 UTC, USD/INR trades +0.03% lower at 74.53.
The Indian Rupee us treading water amid the latest cabinet reshuffle, shrugging off news that Fitch rating agency cut India’s growth forecast.
The ratings agency slashed GDP outlook to 10% for the fiscal year, down from 12.8% previously expected, owing to a slowing recovery from the second wave of covid. However, analysts at the agency did say that a rapid vaccination programme could help boost the recovery reviving businesses and confidence.
The current low vaccination rate in India makes it vulnerable to further waves in the pandemic. As of July 5th just 4.17% of India’s 1.37 billion population was fully vaccinated.
The US Dollar is treading water versus the Rupee and versus its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies trades +0.01% at the time of writing at 92.54 paring holding gains from the previous session.
The US Dollar managed to charge higher in the previous session despite weaker than forecast data and falling treasury yields. Yields on the benchmark 10-year treasury dropped to a 4 month low of 1.35%.
US ISM services PMI showed a larger than expected decline in June from a record high hit in May. The PMI slipped nearly 4 points to 60.1, down from 64 and well short of the 63.5 forecast. The data comes following the tick higher in unemployment seen in the non farm payroll and points to a slowing in growth in the economy. Reopening tailwinds appear to be fading.
Attention will now turn to the release of the minutes of the June FOMC and the JOLTS jobs opening data. Expectations are for job openings to rise again to a fresh record of 9.3888 million.