• Indian Rupee (INR) holds steady after losses
  • Equities rise but oil could limit Rupee’s gains
  • US Dollar (USD) rises on safe haven flows
  • US ISM manufacturing PMI, State of the Union address

The US Dollar Indian Rupee (USD/INR) exchange rate is holding steady on Tuesday after strong gains in the previous session. The pair settled +0.58 higher yesterday at 75.49. At 10:30 UTC, USD/INR trades -0.03% at 75.21.

The Rupee is showing resilience against the stronger USD, boosted in part by the rise in domestic equities. Indian stocks rose over 2,5% yesterday and are on the rise again today, despite ongoing concerns surrounding the Russia, Ukraine conflict.

Whilst stocks across Asia broadly managed to record gains, European markets are still very much in risk off territory.

Strong gains in oil prices could limit the rise in the Rupee. West Texas Intermediate gained 4.5% in the previous session and is up 1% so far today amid supply disruption fears.

The US Dollar is rising across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies trades +0.08% at the time of writing at 96.79 building on gains from the previous session.

The US dollar gained yesterday on safe have flows after the West applied strong sanctions to Russia for invading Ukraine. The sanctions sent the Rouble 30% lower and the central bank of Russia hiked interest rates to 20%. Fears that the sanctions could hurt global growth saw investors seek out the safety of the US dollar.

Today, Russia, Ukraine developments remain in focus. However, US data could provide a distraction. US ISM manufacturing ISM data is due to be released and is expected to rise to 58, up from 57.6. The level 50 separates expansion from contraction so this would still mark strong growth although supply chain disruptions remain a challenge.

Later today, President Biden will give his State of the Union address. This is not usually a market moving event. However if Biden talks about the Russia, Ukraine conflict and US plans then this could be relevant for the USD.