• Indian Rupee (INR) traces domestic equities higher
  • FDI expected to remain strong
  • US Dollar (USD) falls after weak industrial production data
  • US retail sales due tomorrow

The US Dollar Indian Rupee (USD/INR) exchange rate is trending lower on Wednesday, paring gains from the previous session. The pair settled 0.1% higher on Tuesday at 73.64. At 15:30 UTC, USD/INR trades -0.2% lower at 73.50.

The Indian Rupee traced domestic equities higher. The Nifty 50 reached another record high boosted by auto and energy stocks. Whilst energy stocks rose on firmed oil prices, automobile and telecom shares rose on reports that the government was considering incentives and financial reliefs for the sector. The Nifty 50 closed +0.8%.

Separately a report from Deloitte revealed that international investors remain confident in India’s prospects both short and long term. Even through covid Indian has managed to attract record levels of foreign direct investment, totaling $81.72 billion in 2020/21. Deloitte’s survey revealed that  44% of respondents in the US, Japan and UK said that they were planning a first time investment in India.

The US Dollar is trading lower across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies trades -0.2% at the time of writing at 92.46, extending losses from yesterday.

The US Dollar lost ground in the previous session after weaker than forecast CPI inflation data which prompted investors to reconsider the timing of the next move by the Federal Reserve. A weak US non-farm payrolls report earlier in the month and signs that inflation is cooling means that the pressure on the Fed to start tapering bond purchases is easing.

Today US industrial production data also missed forecasts coming in at 0.4% in August month on month, down from 0.8% in July and missing forecasts of 0.5%.

There is no hard impacting data today. Attention will now turn to US retail sales data which is due tomorrow. Expectations are for retail sales to decline in August -0.8% month on month after falling 1.1% in the previous session.