- Indian Rupee (INR) falls as equities decline
- RBI deputy governor defends decision to hike rates
- US Dollar (USD) falls versus major peers
- Federal Reserve Chair Powell speaks
The US Dollar Indian Rupee (USD/INR) exchange rate is gaining on Wednesday extending gains from the previous session. The pair settled +0.1% higher on Tuesday at 78.11. At 16:00 UTC, USD/INR trades +0.14% at 78.28.
The Rupee is falling tracking equity markets lower after comments by the deputy governor of India, who said that the central bank had no choice but to raise interest rates to keep inflation in line. The central bank raised rates by 50 basis points earlier this month after a 40 basis point hike in May to prevent inflationary pressures from growing and becoming broad-based within the economy.
Indian share dropped over 1% lower amid mounting global recession fears. The Nifty 50 closed 1.4% lower and the Sensex dropped 1.35%. Metal stocks came under pressure as commodity prices declined.
The US Dollar is rising against the Rupee but falling against its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades -0.25% at the time of writing at 104.18 after steep losses yesterday.
The US dollar is falling lower as all eyes are on an appearance by the Federal Reserve Chair Jerome Powell before the Senate Banking Committee in Congress. Powell said that the central bank will keep raising interest rates to tame inflation. His comments come after the Fed hiked interest rates by 75 basis points in the June meeting and indicated that more outsized hikes were to come.
The Fed chair highlighted the ability to be able to move quickly in light of the data and respond accordingly. However, he made no reference to the size of the coming rate hike, which disappointed the market and pulled the USD lower.
Looking ahead there is no high-impacting data due to be released today. Investors will continue digesting the Fed Chair’s comments and look ahead to another appearance tomorrow,
