• Indian Rupee (INR) strengths in risk on trade
  • Indian equities gain ground
  • US Dollar (USD) falls as Fed pushes back on tapering
  • US manufacturing & services PMIs up next

The US Dollar Indian Rupee (USD/INR) exchange rate is heading lower on Thursday snapping a five-day winning run. The pair rose +0.18% in the previous session to settle at 73.87. At 11:30 UTC, USD/INR trades -0.33% lower 73.62.

The Rupee is capitalizing on the softer US Dollar and tracing equities higher. Gains in metal stocks and bank helped push shares towards fresh record highs. Both the Nifty 50 and the Sensex traded 0.6% higher.

The Rupee is being lifted by the broad upbeat mood in the market as concerns over China’s second largest property developer Evergrande ease. Risk appetite has returned boosting demand for riskier assets and currencies such as the Indian Rupee.

The US Dollar is lower across the board on Thursday. The US Dollar Index, which measures the greenback versus a basket of major currencies trades -0.32% at the time of writing at 93.19 paring gains from the previous session.

The greenback has moved off one-month highs and is trading lower as investors digest the latest from the US Federal Reserve.

As expected in the latest FOMC meeting the Fed left monetary policy unchanged. The Fed also decided against announcing the start of asset purchase tapering. Instead the Fed said that he time was approaching when tapering purchases could be warranted. In other words the Fed hinted that a formal announcement for tapering could be made towards the end of the year, most likely in the November meeting.

Federal Chair Powell added that he believed that tapering would be completed by mid 2022 opening the door to a rate hike.

Looking ahead attention will turn to the US services and manufacturing PMI which are due later. Analysts are expecting a pick up in activity.