- Indian Rupee (INR) falls as risk sentiment sours
- Indian domestic equities drop 2.5% this week
- US Dollar (USD) rises on hawkish Fed bets
- US core PCE data is due
The US Dollar Indian Rupee (USD/INR) exchange rate is rising on Friday, snapping a two-day losing run. The pair settled -0,26% lower on Thursday at 82.61. At 10:00 UTC, USD/INR trades +0.16% at 82.74 and trades in a range of 82.63 to 82.81.
The Rupee, along with riskier assets, such as stocks, are pushing lower as risk sentiment sours ahead of US inflation data.
Indian domestic equities have registered the biggest losses in eight months amid growing concerns after more aggressive interest rate hikes by global central banks. Beth nifty 50 on the sun sex lost over 2.5% this week amid persistent selling by foreign institutional investors, which means that liquidity is leaving the markets.
Separately India’s economic growth is expected to have slowed further in the October to December quarter amid weakening demand slowing momentum. Expectations are for Asia’s third-largest economy to see growth slow to 4.6% at the end of 2022 and then 4.4% in the current quarter.
The US Dollar is rising across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades +0.26% at the time of writing at 104.86, marking the fourth straight day of rises. The USD is set to rise around 1% this week, its fourth straight week of gains.
The US dollar is pushing higher and has risen to a seven-week peak as investors brace themselves for US interest rates to be hi ya for longer after a series of strong US economic data points.
In the previous session, jobless claims unexpectedly fell to 192,000, down from 195,000 in the previous week. Unless had expected an increase to 200,000. The data comes after strong retail sales and rebounding business activity posted last week.
Looking ahead, attention is now shifting to US core PCE which is the federal reserve’s preferred measure for inflation. Expectations are for core PCE to cool 2 4.3% year on year in January, down from 4.4% YoY in December. Hotter-than-expected inflation could fuel bets of a more hawkish Federal Reserve.