- Indian Rupee (INR) continues to fall
- Widening trade deficit adds pressure
- US Dollar (USD) rises to a 20 year high
- Fed speakers in focus
The US Dollar Indian Rupee (USD/INR) exchange rate is rising on Monday for a seventh straight session. The pair rose +2 % last week, settling at 81.26, trading in a range between 79.57 to 81.43. At 10:00 UTC, USD/INR trades +0.4% at 81.56 after reaching a new record high.
The India Rupee slumped to an all-time low and could continue falling. Investors across the globe are ditching riskier assets and currencies such as the Rupee in favor of the US dollar for its safe haven status, and as the Federal Reserve is expected to continue hiking rates aggressively.
The widening in the Indian current account deficit, which could grow to 3.5% of the GDP and possibly 4% if exports weaken further, is also dragging on the Rupee.
Foreign portfolio flows are likely to remain volatile, given the weak global risk sentiment.
The Sensex falls 2.6% on global growth fears after falling 1.6% over the last week.
Meanwhile, falling oil prices should help limit losses. West Texas Intermediate trades -0.8% lower at 78.40, an 8-month low.
The US Dollar is rising across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades at +0.35% at the time of writing at 113.42, adding to gains of 3% across last week.
The US dollar surged last week after the Federal Reserve raised interest rates by 75 basis points and indicated that it would continue hiking rates aggressively across the remained of the year and into 2023.
The market is now expecting a 75-basis point hike in November and at least a 50-basis point hike in December.
However, aggressive moves by the Fed could result in slower growth and possibly a recession.
Today there is no high-impacting US economic data to be released. Several Fed speakers are due to hit the airwaves. Hawkish commentary from these speakers could see the USD rise further.