inr-bank-notes - INR
  • Indian Rupee (INR) rises after 4 days of declines
  • Oil prices remain elevated
  • US Dollar (USD) rises after strong US GDP data
  • US Core PCE inflation due

The US Dollar Indian Rupee (USD/INR) exchange rate is falling on Friday, snapping a 4-day winning run. The pair settled +0.41 higher on Thursday at 75.18. At 11:30 UTC, USD/INR trades -0.14% at 75.08.

The Rupee has come under pressure this week owing to a combination of factors. The prospect of the US Federal Reserve adopting a more aggressive path to policy normalistion, the risk off mood stemming from eastern Europe geopolitical tensions and the resultant rising oil prices.

Today, these factors haven’t changed, but selling in the Rupee has eased today, even though domestic equities finished the session slightly lower.

Oil prices remain elevated with West Texas Intermediate trading around a 7 year high.

The US Dollar is falling versus the Rupee but is rising versus its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies trades +0.13% at the time of writing at 97.38 adding to gains of over 1.3% in the previous session.

The US Dollar charged higher on Thursday after data showed that the US economy powered ahead in the final three month of the year. GDP smashed forecasts rising to 6.9% on an annualized basis. This was three times the growth seen in the third quarter and was also well above the 5.5% that analysts had penciled in. This means that the US experienced it strongest full year growth since 1984, ending 2021 on a high.

The strong data came hot on the heels of the Fed meeting where the US central bank prepared the market for a March rate hike. The Fed funds are pricing in up the 5-interest rate rises across 2022.

Attention today will remain on the US economic calendar with the release of US Core PCE index, the Fed’s preferred measure of inflation. Expectations are for inflation to rise to 4.8%, up from 4.7%. A stronger than forecast print could lift the US dollar higher.