• Indian Rupee (INR) holds steady but is set for a weekly gain
  • Indian trade deficit narrows slightly
  • US Dollar (USD) falls after a solid jobs report
  • US jobs are being added & people are returning to the workforce

The US Dollar Indian Rupee (USD/INR) exchange rate is holding steady on Friday after strong gains in the previous session. The pair settled +0.2% higher on Thursday at 79.71 after trading a range of 79.28-79.71. At 15:00 UTC, USD/INR trades +0.01% at 79. 72.   Across the week the pair is set to lose -0.35%.

India’s trade deficit, the difference between imports and exports, came in at $28.7 billion, a slight pullback from the record $30 billion which was recorded in July.

The trade deficit is so high, owing to the strong USD, which is creating a headache for authorities.

Separately the Reserve Bank of India reiterated today that inflation had peaked and could ease back to around 5% in the June quarter. The RBI added that inflation was high owing to supply-side issues rather than demand.

The US Dollar is holding steady against the Rupee but is falling against its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades -0.40% at the time of writing at 109.29. The USD is set to gain 0.44% across the week.

The USD is falling after the latest US non-farm payroll data showed that 315,000 jobs were added in August, slightly above the 300,000 forecasts. Meanwhile, the unemployment rate rose to 3.7%, up from 3.5%. This was owing to the participation rate rising. Basically, more people have joined the workforce as the cost of living rises.

More people joining the workforce is easing pressure on wages Average wage growth held steady at 5.2%, when expectations had been for a tick higher to 5.3%. The market reined in hawkish Federal Reserve bets following the data, which has helped the USD lower.

According to the CME Fedwatch tool the market is pricing in a 57% probability of a 75 basis point rate hike. This is down from 74% before the data was released.