inr-bank-notes - INR
  • Indian Rupee (INR) falls risk-off trade
  • Indian equities fall to a 5-month low
  • US Dollar (USD) falls as aggressive Fed hike bets slow
  • US inflation data is due tomorrow

The US Dollar Indian Rupee (USD/INR) exchange rate is rising, extending gains from the previous week. The pair rose 0.3% across last week, settling on Friday at 81.96. At 17:00 UTC, USD/INR trades 0.33% at 82.23 and trades in a range of 81.67 to 82.31.

While the Rupee managed to open higher against the US dollar those gains were short-lived amid high US dollar demand from importers and speculators.

Risk sentiment also took a drive, with domestic equities hitting a five-month low dragged down by banking stocks amid the fallout from the SVB bank collapse.

Separately oil prices fell sharply lower amid fears of a recession in the US should a financial crisis be brewing. West Texas Intermediate fell to a 2023 low.

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 -1% at the time of writing at 103.50, marking its fourth straight day of losses.

The US dollar is falling sharply lower as investors pushed back on expectations that the Federal Reserve will hike interest rates at the March meeting. Given the fallout from the Silicon Valley Bank collapse and the measures taken by The Fed and the treasury to shore up market confidence, some analysts suggest that the central bank may not even hike rates battle.

Analysts at Goldman Sachs have said that they no longer expect the Fed to hike interest rates in March owing to the stress on the banking system that has come from its steep monetary policy tightening cycle. They believe the Fed will pause rate hikes and assess the impact on the economy before hiking by a further 25 basis points in May, June and July.

Looking ahead, there is no more high-impacting U.S. economic data today attention is shifting to tomorrow’s inflation report, which could be the deciding factor as to whether the Fed hikes rates in March or not.