• Indian Rupee (INR) falls current account to widen
  • Indian equities fall
  • US Dollar (USD) rises after a strong week
  • US consumer sentiment

The US Dollar Indian Rupee (USD/INR) exchange rate is flat on Friday after strong gains in the previous session. The pair settled +0.5% higher yesterday at 79.83 after trading in a range between 79.43 to 79.85. At 10:00 UTC, USD/INR trades -0% at 79.83. The pair is set to rise 0.16% across the week.

The Indian current account is expected to widen to a decade level in the April to June quarter. On the back of surging global commodity prices and the largest capital outflows since the 2008 financial crisis.

The Rupee trades around a record low, which with the widening trade gap, concerns over the current account shortfall could intensify. This is then hurting demand for the Rupee further, in a vicious spiral.

The trade deficit last quarter is expected to be $30.5 billion, equivalent to 3.6% of GDP,  the highest level in around 10 years.

Separately Indian domestic equities are falling again, dragged lower by the tech sector. The Sensex trades -1.6% lower.

The US Dollar is rising across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades at +0.39% at the time of writing at 110.16 adding to gains in the previous session. The US dollar index is on track to rise 1.1% this week, after losses last week.

The US dollar rose yesterday after upbeat data boosted expectations that the Federal Reserve will raise interest rates at a faster pass in the coming months. US retail sales surprised the market and rose 0.3% month on month, ahead of forecasts of staying unchanged at 0%.

Meanwhile initial jobless claims fell to 213,000, this was down from 218,000 in the previous week. Claims of 126,000 had been penciled in by analysts.

Looking ahead, attention is now on US Michigan consumer confidence figures, which are expected to show a slight improvement in consumer morale, most likely owing to the tick lower in petrol prices at the pumps.