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USD/INR: Rupee rises as manufacturing activity shows resilience

1st November 2022

Indian Rupee (INR) rises as manufacturing PMI rises to 55.3
Domestic equities also rise in risk-on trade
US Dollar (USD) falls versus major peers
US ISM manufacturing & Jolts job openings data due

The US Dollar Indian Rupee (USD/INR) exchange rate is falling on Tuesday after booking gains in the previous session. The pair rose 0.6% on Monday, settling at 82.77, trading in a range between 82.31 to 82.87. At 12:00 UTC, USD/INR trades -0.2% at 82.57.

The Rupee is rising as risk assets across the board benefit from improved risk sentiment. Domestic equities are rising, with both the Sensex and the Nifty 50 booking gains of 0.6% and 0.75%, respectively.

India’s manufacturing activity remained strong in October, according to the latest PMI data. The S&P Global India manufacturing PMI was up from 55.1 in September to 55.3 in October, marking the 16^th straight month of growing activity. News orders rose, albeit at a slower pace; firms also added additional workers. Looking ahead manufacturers remained confident of a rise in output volumes across the coming year.

The US Dollar is falling across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades at -0.6% at the time of writing at 110.85 after four straight days of gains.

The USD is edging lower, tracking the 10-year bond yield southwards as attention shifts to the start of the Federal Reser4ves two day monetary policy meeting. The US dollar’s rally over the past quarter faltered in October as investors start to question the Federal Reserve’s next steps. Bets are rising that the Fed could start to ease the pace at which it raises interest rates after tomorrow’s rate decision.

Attention will now turn to the ISM manufacturing PMI, which is expected to slip to 50 in October, down from 50.9 in September.

JOLTS job openings are expected to show 10 million vacancies in September, down slightly from 10.05 million in August. Whilst job openings are falling slowly, they are still extremely high and highlight the tightness in the labour market.