• Indian Rupee (INR) falls after more dovish than expected RBI
  • Indian growth & inflation outlook unchanged
  • US Dollar (USD) falls on safe haven outflows
  • US JOLTS jobs openings

The US Dollar Indian Rupee (USD/INR) exchange rate is moving higher on Wednesday after a flat finish in the previous session. The pair settled+0.0% on Tuesday at 75.39. At 10:00 UTC, USD/INR trades +0.11% at 75.47.

The Reserve Bank of India kept its key lending rate unchanged on Wednesday at a record low. The central bank said that it will continue to prioritize growth although warned over rising inflation and the risks that the new Omicron COVID variant poses to the recovery.

Even though the RBI maintained its accommodative position, it set out plans to remove some liquidity from the banking system in what is widely considered a pre-step to raising the key borrowing rate, potentially early next year. However broadly speaking the meeting was slightly more dovish than the markets were expecting, dragging on demand for the Rupee.

The RBI maintained its full year economic growth outlook at 9.5% and also kept its retail inflation forecast unchanged at 5.3%. The Indian economy grew 8.4% in the September quarter compared to a year ago, the fastest pace of growth amongst major economies.

The US Dollar is trading higher against the Rupee but lower versus its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies trades -0.12% at the time of writing at 96.25, paring gains from the previous session.

The US Dollar is edging lower after two straight sessions of gains. The US dollar is edging lower as investors sell out of the safe haven greenback in search of riskier currencies. The mood in the market continues to improve amid more Omicron headlines which suggest that the newest variant is not as severe as Delta, although does appear to be much more contagious.

Looking ahead US JOLTS job opening data will be in focus. Should the report show a continued improvement in the US labour market, it could spark bets of a sooner move by the Fed to raise interest rates.