- Indian Rupee (INR) falls as growth is downwardly revised
- IMF see growth at 7.4%, down from 8.2%
- US Dollar (USD) rises as the FOMC meeting begins
- US Consumer confidence falls more than expected
The US Dollar Indian Rupee (USD/INR) exchange rate is rising on Tuesday paring losses from the previous session. The pair settled 0.20% lower on Monday at 79.69. At 15:30 UTC, USD/INR trades +0.12% at 79.78.
The Rupee trades under pressure after the International Monetary Fund cuts the Indian growth forecasts and global growth forecasts again, hurting risk sentiment.
The ratings agency now sees the Indian economy growing 7.4% in the fiscal year 2022-3 which was a downward revision by 0.8% points. This is still marginally higher than the RBI’s forecast of just 7.2% growth. The downward revision reflects less favorable external conditions and faster monetary policy tightening.
The IMF forecasts that global growth slowing to 3.2% in 2022 down from 3.6% previously forecast.
The US Dollar is rising across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades +0.56% at the time of writing at 107.09 after losses in the previous session.
The US dollar is charging higher on a mix of safe haven flows and hawkish expectations as the Federal Reserve two-day monetary policy meeting begins.
The US dollar in shrugging off data showing that US consumer morale fell in July to the lowest level since February 2021. The Conference Board’s consumer confidence index dropped to 95.7 in July, down from 98.4 in June and below the 97.2 that analyst had penciled in.
Consumer sentiment has fallen as consumers contend with rising prices as inflation sits at a 40-year high. Highlighting the impact that inflation is having Walmart, the US retailer warned on profits, revising profits downwards by 13% as shoppers rein in their spending.
The Fed kicked off the two day meeting day and are due to announce the interest rate decision tomorrow. Expectations are for the Fed to raise interest rates by 75 basis points.