- Indian Rupee (INR) falls after small gains yesterday
- Analysts see the Rupee falling further on central bank divergence
- US Dollar (USD) falls ahead of today’s decision
- Fed to hike by 0.75%
The US Dollar Indian Rupee (USD/INR) exchange rate is rising on Wednesday, paring losses from the previous session. The pair fell -0.14% yesterday, settling at 82.65, trading in a range between 82.49 to 82.82. At 10:00 UTC, USD/INR trades +0.14% at 82.68.
The Rupee is under pressure today as investors look ahead to the US Federal Reserve interest rate decision. The Rupee has come under pressure in recent months as the Fed hiked rates more aggressively than the Reserve Bank of India. Analysts believe that the divergence between the two central banks is likely to widen over the coming months as the RBI starts to ease rate hikes more than the Fed.
The Rupee is already down over 10% so far this year on USD strength, and as the RBI spends USD to shore up the Rupee.
The US Dollar is rising against the Rupee but falling against its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades at -0.25% at the time of writing at 111.21 after booking losses of 0.05% yesterday.
The US dollar is edging lower as investors look ahead to the Federal Reserve interest rate decision later today. The US central bank is expected to raise interest rates by 0.75% today, in a move that has been well choreographed. However, investors are more focused on what may happen after this meeting. Expectations have been growing that the Federal Reserve could slow the pace at which it hikes rates from December.
Recent data, however, hasn’t necessarily supported such a move. Core inflation has continued rising, US economic growth was stronger than expected in the third quarter and non-farm payrolls held above 200,000.
Should the Fed hint towards a less hawkish path, the USD could fall. However, should the US central bank continue to sound aggressive then the USD could fall.