- Indian Rupee (INR) shows resilience
- Domestic equities fall and oil rises
- US Dollar (USD) rises to a 2 year high versus major peers
- US pending home sales due later
The US Dollar Indian Rupee (USD/INR) exchange rate is ticking lower on Wednesday for a second straight day. The pair settled -0.08% lower on Tuesday at 76.66. At 10:00 UTC, USD/INR trades -0.05% at 76.62.
The Rupee is managing to push higher, showing resilience against the stronger USD even as domestic equities fall and oil prices rise.
Indian shares traced Asian peers lower on Wednesday as the market mood soured over fears of a slowdown in global growth.
The Sensex trades -0.9% lower at 56,845 after booking strong gains yesterday. The Nifty 50 trades 0.7% lower at 17,077 after a 1.5% rally yesterday.
Oil prices are edging up after rising 3.2% yesterday following Russia cutting off Poland and Bulgaria’s oil supply. Putin is insisting that the gas be paid for in rubles. West Texas Intermediate trade back over $100 per barrel.
Rising oil prices can drag on demand for the Rupee as India imports 80% of its oil requirements, meaning that a rise in oil prices could hurt economic growth.
The US Dollar is falling versus the Rupee but gains versus its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades +0.3% at the time of writing at 102.76 a fresh 2-year high.
The USD is rising versus its major peers, boosted by safe-haven flows. Fears over slowing global growth are boosting demand for the greenback.
Energy prices continue to rise as Russia cuts European gas supplies which will mean that inflation has higher to run. Central banks may need to hike interest rates further, threatening recession.
Concerns over China’s rising COVID cases and the prospect of more lockdowns are adding to dollar demand as well as expectations that the Fed will hike interest rates aggressively.
There is no high impacting US data due today, just mid-tier pending home sales. Sentiment could be a bigger driver, with investors watching developments in Europe closely.
