- Indian Rupee (INR) falls as Indian government plans to raise spending
- Plans to reduce its fiscal deficit
- US Dollar (USD) falls versus major peers
- US Federal Reserve rate decision is due
The US Dollar Indian Rupee (USD/INR) exchange rate is rising for a fourth straight day. The pair settled +0.3% higher on Tuesday at 81.79. At 10:00 UTC, USD/INR trades +0.06% at 81.82, trading a range of 81.67 – 81.89.
The Rupee falling in the wake of the Indian budget, the last budget ahead of elections in 2024. India’s government unveiled a $550 billion budget for the next fiscal year, which starts on April 1.
This represents a large jump in capital spending and income relief to the middle class, which is hoped to boost consumption. The government has also said that it is targeting a 0.5% reduction in its fiscal deficit from 6.4% to 5.9% this year.
The US Dollar is rising against the Rupee but falling against major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades -0.16% at the time of writing at 101.94, a second straight day of losses.
The US dollar trades lower as investors continue digesting cooling inflation figures from yesterday and as they look ahead to the Federal Reserve interest rate decision later today.
Data yesterday showed that employment costs in the USA raised by less than expected, putting the idea that inflationary pressures in the US are easing.
The figures came ahead of today’s Federal Reserve interest rate announcement. The Fed is widely expected to slow the pace of rate hikes to 25 basis points, taking the main lending rate who 4.75%. This comes after a 50 basis point rate hike in December and 475 basis point hikes previous to that.
Ahead of the rate decision, that is plenty of U.S. data for investors to digest, including the ADP employment change and the jokes job opening figures, which come ahead of the US nonfarm payroll data on Friday. US ISM manufacturing PMI is also due.