- Indian Rupee (INR) falls ahead of Fed rate announcement
- Domestic equities and oil trade higher
- US Dollar (USD) falls ahead of Fed rate decision
- 75 basis point rate hike is expected
The US Dollar Indian Rupee (USD/INR) exchange rate is rising on Wednesday for a second straight day. The pair settled 0.20% higher on Tuesday at 79.84. At 10:30 UTC, USD/INR trades +0.04% at 79.87.
The Rupee continues to fall away from a one-week high reached earlier in the week. The Rupee along with domestic equities are showing signs of caution ahead of the Federal Reserve monetary policy decision later.
The Sensex trades 0.5% higher at 55,710 and the Nifty 50 trades 0.7% higher at 16,600.
Oil prices are on the rise after losses in the previous session. Oil trades 1% after reports of inventories falling in the US.
The American Petroleum Institute revealed that oil inventories dropped by 4 million barrels, four times more than what was expected, highlighting concerns over tight supply.
The US Dollar is rising versus the Rupee but falling versus major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades -0.12% at the time of writing at 107.01 after strong gains in the previous session.
The US dollar is edging lower but remains near its 20-year high as investors look ahead to the Federal Reserve interest rate decision. The US central bank is expected to hike interest rates by 0.75%, after raising rates by 0.75% in the previous month as it continues to fight against 40 yea\r high inflation. There is just a small possibility of an increase of 1%.
Following the rate decision attention will turn to Federal Reserve Chair Jerome Powell who is due to speak at the press conference. Investors will be looking for clues as to whether the Fed intends to hike rates in September by 50 or 75 basis points? With economic data starting to show signs of a slowdown and recession fears building the Fed might look to ease back on rate hikes.