inr-symbol-forex-performanc - INR
  • Indian Rupee (INR) falls, GDP downgraded
  • The IMF expects growth of 9% in FY22
  • US Dollar (USD) rises on hawkish Fed expectations
  • Fed rate announcement due later.

The US Dollar Indian Rupee (USD/INR) exchange rate is moving higher on Wednesday for a third straight session. The pair settled +0.21 higher on Tuesday at 74.71. At 15:30 UTC, USD/INR trades +0.14% at 74.87.

The International Monetary Fund have cut India’s GDP outlook for FY22 to 9%, down from expectations of 9.5% made in October. The IMF has joined a host of other agencies which have said that they expect growth to slow owing to the impact of Omicron on the economy. The government forecasts economic growth of 9.5%

Business activity and mobility are being affected by rising COVID cases. The number of cases in India has risen by 285,914 cases over the last 24 hours according to government figures.

The Indian economy contracted by 7.3% in the 2020-21 fiscal year.

The US Dollar is rising across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies trades +0.15% at the time of writing at 96.09 marking its third straight day of gains.

The US dollar trades around a two and a half month high with all eyes on the Federal Reserve interest rate decision later today. The Fed is not expected to hike interest rates at this meeting. However, the US central bank is expected to prepare the market for an interest rate increase of 0.25% in the March meeting, when the bond buying programme is also expected to conclude.

The market is expecting a hawkish Fed, which has driven the US Dollar higher in recent sessions. Investors will be watching closely for any comments regarding the reduction of the balance sheet. The minutes to the last Fed meeting suggested that the Fed could be looking to reduce the balance sheet in quantitative tightening sooner than initially expected. A more hawkish sounding Fed could send the US Dollar higher.