counting-inr-bank-notes - INR
INR bank notes
  • Indian Rupee (INR) fall in risk off trade
  • Indian domestic equities drop for 5th straight session
  • US Dollar (USD) rises on safe have inflows
  • US PMIs due

The US Dollar Indian Rupee (USD/INR) exchange rate is moving higher on Monday, adding to gains booked in the previous week.  The pair gained 0.3% across last week, settling on Friday at 74.38. At 15:30 UTC, USD/INR trades +0.32% at 74.66.

The Indian Rupee is trading under pressure in a broad risk off environment. Geopolitical concerns over escalating Russia- Ukraine tensions are unnerving investors. Riskier assets and currencies such as stocks and the Rupee are our of favour, whilst demand for safe havens is on the rise.

Indian shares are falling for a fifth consecutive session today and have fallen to a three-week low. The Nifty 50 closed 2.6% lower after dropping 3.5% last week. The Sensex also closed 2.6% lower.

Separately oil prices are also declining, although remain around the 7 year high reached last week.

The US Dollar is rising across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies trades +0.12% at the time of writing at 95.73 building on gains from last week.

The US Dollar is pushing higher, boosted by safe haven flows amid escalating Russia-Ukraine tensions and as investors turn their attention to the Federal Reserve monetary policy meeting which kicks off tomorrow.

The US has told diplomatic families to leave Ukrain amid fears that Russia could send in troops at any moment. Russia deny that this is the case.

The Fed is expected to prepare he market for the end of the bond buying programme and a hike in interest rates in March.

Ahead of the start of the meeting, today sees the release of services and manufacturing PMI data. Activity in both the manufacturing and the service sector are expected to slow slightly in January. Analysts are forecasting that manufacturing activity will slip to 56.7 down from 57.7 and services to 55, down from 57.6.