indian-rupee-bank-notes - INR
  • Indian Rupee (INR) edges higher with RBI in focus
  • No change in policy expected on Friday
  • US Dollar (USD) rises versus major peers
  • US factory orders beat forecasts

The US Dollar Indian Rupee (USD/INR) exchange rate is moving lower after a muted start to the trading week. The pair held steady settling -0.02% at 74.35 on Monday. At 15:00 UTC, USD/INR trades -0.12% lower at 74.26.

All eyes are on the Reserve Bank of India which is expected to make its monetary policy announcement on Friday. The central bank is expected to leave interest rates at a record low for a seventh consecutive meeting with attention on what the central bank has to say about normalizing liquidity.

The covid pandemic hit the Indian economy hard and the RBI have remained accommodative to support the economy even as inflation shot higher . Most analysts don’t expect the RBI to raise interest rates until next year. However, some expect the RBI to offer clues as to when it will start reducing liquidity.

The US Dollar trading lower versus the Rupee but higher versus its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies trades +0.06% at 92.09.

The US Dollar is gaining ground after data revealed that he slowdown in the US factory orders wasn’t as steep as initially feared. Factory orders rose 1.5% month on month in June, down from 2.3% rise in May but still well ahead of the 1% increase forecast.

The data comes hot on the heels of the US ISM manufacturing figures yesterday which had shown that activity in the sector slowed by more than what analysts were expecting.

Whilst economic data today boosted the greenback, gains were being capped by falling treasury yields. Concerns over the economic recovery are rising as covid cases surge to over 70,000 a day. This is up 44% on the week.