• Indian Rupee (INR) falls versus stronger US
  • Falling oil prices limit losses
  • US Dollar (USD) eases from almost 4-year high
  • US PMIs due

The US Dollar Indian Rupee (USD/INR) exchange rate is heading higher for a third straight day. The pair settled 0.13% higher on Monday at 74.42. At 11:00 UTC, USD/INR trades +0.04% at 74.45.

The Rupee is coming under pressure owing to a strong US dollar, even though domestic equities pushed higher and oil prices fell.

The Sensex closed 0.3% higher whilst the Nifty 50 advanced 0.7%.

Separately Goldman Sachs expect the Indian economy to grow 9.1% in 2022 as it continues to rebound from the pandemic.

Oil prices are falling lower paring gains from the previous session on growing expectations that the US, China, Japan and India will release strategic reserves in an attempt to lower the price of oil, even as COVID cases in Europe surge higher.

Falling oil prices are offsetting the impact of Powell’s appointment helping to keep gains in USD/INR capped.

The US Dollar is trading higher versus the Rupee but is falling versus its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies trades -0.11% at the time of writing at 96.45 but remained near a 4 year high.

The US Dollar surged higher on Monday after President Biden announced the re-nomination of Jerome Powell as Federal Reserve Chair for another 4 years. The US Dollar traces treasury yields higher amid the expectation that Jerome Powell could become more aggressive with monetary policy over the coming year.

Bets are rising that the Fed could start to hike interest rates sooner or that there will be two rate rises across 2022.

Today the US Dollar is easing back from yesterday’s highs, as investors look ahead to the release of US business activity data as measured by the PMIs. Both the manufacturing and service sector PMIs are expected to show that activity increased in November, rising to 59. The level 50 separates expansion from contraction. A strong reading could further support the likelihood of an interest rate rise sooner rather than later.