• Indian Rupee (INR) shows resilience
  • Consumer demand outlook set to improve
  • US Dollar (USD) rallies on safe have flows amid Evergrande crisis
  • US FOMC rate announcement on Wednesday

The US Dollar Indian Rupee (USD/INR) exchange rate is trading flat on Monday after booking gains across last week. The pair rose +0.2% last week to close on Friday at 73.64. At 11:30 UTC, USD/INR trades unmoved at 73.64.

The Rupee is showing resilience against US Dollar. Ratings agency ICRA highlighted the unconvincing performance in high frequency indicators so far this month, saying boost following the easing of lockdown restrictions appears to have been temporary.  However, the rating agency is more optimistic regarding the outlook for the Indian economy. The ICRA see the upcoming festive season boosting consumer demand.

Typically, big ticket purchases such as cars electronic and real estate rise during the festive season which starts in early October.

Concerns over a third wave of covid has so far kept consumer morale subdued.

The US Dollar is trading flat versus the Rupee. However, it is extending gains for a third straight day on Monday. The US Dollar Index, which measures the greenback versus a basket of major currencies trades +0.12% at the time of writing at 93.33 at multi-week highs.

The US Dollar is finding support from safe haven inflows amid the unfolding Evergrande crisis. The risk off mood in the market comes as China’s second largest real estate firm finds itself in financial distress with authorities showing little desire to help bail the corporate giant out.

Whilst the Chinese stock market was closed today due to a holiday, stocks all over the world are down amid fears of a much wider crisis in China’s real estate. Fears of contagion are growing and that it could have wider implications for global growth.

Also lifting the US Dollar are rising bets that the Fed could consider making a taper announcement on Wednesday at the September FOMC meeting. This comes after retail sales unexpectedly rose in August.