- Indian Rupee (INR) rises on upbeat RBI comments
- India’s economic activity remains strong despite global risks
- US Dollar (USD) tumbles post Fed
- Federal Reserve to hiked rates by 75 basis points
The US Dollar Indian Rupee (USD/INR) exchange rate is falling on Thursday paring gains from the previous session. The pair settled +0.2% higher on Wednesday at 78.14. At 16:00 UTC, USD/INR trades -0.22% at 77.98.
The Rupee benefits from the weaker USD and from upbeat comments from the Reserve Bank of India. The RBI considers that the domestic macroeconomic conditions in India have improved despite the risks to global growth.
GDP for 2021/22 surpassed the pre-pandemic level by 1.5%. The bank added that high-frequency indicators suggest that economic activity continues gathering pace in 2022/23.
The RBI touched on inflation but said that the food and fuel price rises were outside of its remit. Food and fuel currently make up 60% of India CPI growth.
The RBI has hiked interest rates twice over the past two meetings.
The US Dollar is falling across the board The US Dollar Index, which measures the greenback versus a basket of major currencies, trades -1% at the time of writing at 103.43 adding to steep losses yesterday.
The US dollar fell yesterday despite the Federal Reserve raising interest rates by 0.75% as was expected by the market. This was the largest interest rate hike in 28 years as the US central bank battles to bring inflation lower.
The Federal Reserve made it clear that it was prepared to keep raising interest rates even if this means that the US economy will fall into a recession.
Data from the US was concerning with the housing market weakening again in May as rate hikes start to be felt across the economy. Housing starts fell 14.4% on the month to 1.549 million whilst building permits fell 7%.
Jobless claims data also showed that the jobs market was calming with the number of Americans applying for unemployment benefits at 229,000 and last week’s number was upwardly revised to 232,000.