indian-rupee-bank-notes - INR
  • Indian Rupee (INR) falls on continued outflows
  • Rupee could see further losses
  • US Dollar (USD) rises as Fed hike bets increase
  • US inflation due later in the week

The US Dollar Indian Rupee (USD/INR) exchange rate is rising on Monday for a fourth straight session. The pair gained 0.4% across last week, settling on Friday at 77.26. At 14:00 UTC, USD/INR trades +0.40% at 79.57.

The Indian dollar fell to a record low on Monday amid continued foreign outflows from domestic equity markets and owing to a strong greenback, despite some intervention from the Reserve Bank of India.

The RBI announced several measures last week to try to bring in USD. These included allowing foreign investors to buy short-term corporate debt and making more government securities available. These should help ease pressure on the Rupee. However, with a widening trade deficit and continued FPI outflows the Rupee could in fact fall lower.

Foreign Portfolio Investors (FPI) have sold shares to the values of nearly $30 billion so far this year and are expected to keep selling.

The US Dollar is rising across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades +0.53% at the time of writing at 108.13 after strong gains last week.

The US Dollar powered higher last week after strong data helped to ease recession fears. The ISM services PMI for June fell by less than expected and the US non-farm payroll was also significantly stronger than expected with 372,000 jobs added in June, well above the 270k forecast. This was down slightly from the 390,000 in May but dispelled fears of a recession. Any weakness elsewhere in the economy is not yet showing up in the labour market.

Today there is no high-impacting US data due to be released. Federal Reserve President Williams for New York is due to speak later. The market is pricing in a 93% probability of a 75 basis point rate hike this month and has even started pricing in the probability of a 100 basis point rate hike.