• Indian Rupee (INR) slips as manufacturing growth slows
  • RBI raised interest rates by 50 basis points
  • US Dollar (USD) rises versus major peers on safe-haven flows
  • US ISM manufacturing data is due

The US Dollar Indian Rupee (USD/INR) exchange rate is rising on Monday, adding to gains from the previous week. The pair gained 0.3% across last week settling at 8150 on Friday, trading in a range between 81.15 to 82.21. At 10:00 UTC, USD/INR trades +0.40% at 81.83.

The Rupee trades under pressure after data showed that factory growth slowed to a three-month low in September. A combination of moderating demand and output overshadowed cooling inflationary pressures and strong business confidence.

The S&P Global manufacturing PMI fell to 55.1 in September from 56.2 in August. This was short of the 55.8 forecast. The level 50 separates expansion from contraction. This marked the fifteenth straight month of contraction.

The data comes after the Reserve Bank of India raised interest rates by 50 basis points taking the total to 190 basis points of hikes since May.

The US Dollar is rising across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades at +0.16% at the time of writing at 112.30, paring losses from last week.

The USD is rising on a mix of safe haven flows and amid rising expectations that the Federal Reserve will act more aggressively to hike interest rates.

On Friday, core personal consumption expenditure, the Fed’s preferred gauge for inflation, rose by more than expected to 4.9% year on year, up from 4.7%. The data came following stronger than forecast US durable goods orders earlier in the week. The strong figures could embolden the Fed to hike faster.

As the new week begins, the risk-off mood in the market is helping drive flows into the USD. Equity markets trade at 2-year lows.

Looking ahead, attention now turns to the US ISM manufacturing PMI, which is expected to show that activity slowed to 52.2 in September, down from 52.8.