• Indian Rupee (INR) falls in risk-off trade
  • A hawkish Fed & weak China data hit demand
  • US Dollar (USD) rises after the Fed looks set to rise rates for longer
  • US retail sales fall

The US Dollar Indian Rupee (USD/INR) exchange rate is rising on Thursday for a second straight session.  The pair rose 0.15% yesterday, settling at 82.49. Today, at 14:30, USD/INR trades +0.34% at 82.79, trading in a range between 82.41 to 82.82.

The Indian Rupee is falling, tracking domestic equity is lower after a hawkish Federal Reserve and weak data from China, a key trading partner.

Chinese retail sales slipped further in November, dropping 5.9% year on year, down from a 0.5% drop in October. Industrial production and property investment also fell as the Covid restrictions hampered economic growth. Remember that Beijing didn’t ease Covid restrictions until December.

The Sensex closed the session 1.4%, and the Nifty 50 fell 1.3%.

The US Dollar is rising across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades at +0.1% at the time of writing at 103.86, snapping a two-day losing run.

The US dollar is rising but has fallen away from daily highs as investors continue to digest the December Federal Reserve interest rate decision and the latest USS economic data.

The Federal Reserve raised interest rates at a slower pace of 50 basis points, down from 75 basis points in the last four meetings. However, the Fed also pointed to more rate hikes next year, lifting the terminal fed rate to 5.1% up from 4.6%. This suggests that inflation is likely to be stickier and will take longer to bring down to the 2% target. The Fed also pushed back on expectations of a rate cut next year and Fed Chair Jerome Powell suggested that there was still much work to be done.

The data today showed that US retail sales fell by more than expected, dropping -0.6% month on month in November after rising 1.3% in October. Meanwhile, jobless claims fell by more than expected two 211,000.