• Indian Rupee (INR) edged lower despite broad risk on mood in the market
  • ADB warns the economic recovery could be dented by Delta
  • US Dollar (USD) steady with all eyes on the Fed
  • US FOMC rate announcement later today

The US Dollar Indian Rupee (USD/INR) exchange rate is extending gains on Wednesday for a fifth straight session. The pair rose +0.13% to settle at 73.74. At 11:30 UTC, USD/INR trades 0.14% higher 73.84.

The Indian Rupee has failed to find support from upbeat Asian headlines. News that the People’s Bank of China injected liquidity into the system in order to safeguard from a broader fallout from Evergrande has lifted the mood in the market.

Furthermore, Evergrande has confirmed that it will pay its coupon tomorrow, a move that was previously doubted and has also boosted sentiment across financial markets.

However, the Asian Development Bank unnerved investors with a warning that developing Asia’s economic rebound could be dampened by the rapid spread of Delta.

The US Dollar is trading higher versus the Rupee but flat 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 93.21 after booking mild losses in the previous session.

The US Dollar is holding steady as investors look ahead to the Federal Reserve interest rate announcement later today. The Fed is not expected to adjust monetary policy, keeping interest rates steady at historic lows. The Fed is not expected to rein in bond purchases but is widely expected to pave the way to tapering bond purchases later in the year.

Furthermore, the Fed will provide updated growth and inflation projections which should indicate whether the Fed considers high inflation and resurgent covid are weighing on the outlook. The latest data has revealed a slowdown in jobs growth and whilst inflation remains elevated. There are also signs that the service sector side of the economy is also experiencing slowing growth.

A more hawkish shift from the Fed could lift the US Dollar. On the other hand, if the Fed doesn’t talk tapering then the greenback could fall.