- Indian Rupee (INR) is supported by upbeat RBI comments
- The RBI warned that inflation could rise
- US Dollar (USD) falls after the FOMC rate decision
- US jobless claims are due
The US Dollar Indian Rupee (USD/INR) exchange rate is falling on Thursday for a second straight session. The pair fell 0.2% yesterday, settling at 82.50. At 10:00 UTC, USD/INR trades -0.28% at 82.65 and trades in a range of 82.07 to 82.53.
The Rupee, along with other Asian currencies, is benefitting from the weaker U S dollar following the Fed rate decision.
The Rupee is also finding support from upbeat comments from the Reserve Bank of India. The RBI said that the Indian economy emerged from the pandemic stronger than expected and has picked up momentum since Q2 of the current fiscal year.
The RBI added that it does not expect India to slow down like the global economy in FY23, which raises concerns that inflation could push higher.
The US Dollar is falling across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades -0.08% at the time of writing at 102.36, marking its sixth straight day of declines.
The US dollar Is falling as investors continued to digest the latest Federal Reserve interest rate decision. The U.S. central bank raised interest rates by 25 basis points taking the rate to 4.75% to 5%, in line with expectations.
The Fed Chairman Jerome Powell said that policymakers weighed up pausing rate hikes in light of the recent stress seen in the banking sector. However, they concluded that inflation is still too high and, therefore, interest rates must rise.
Of note, the Fed adjusted the statement removing the phrase “ongoing increases,” which has fuelled expectations that the Fed is near the end of its rate hiking cycle. This dragged on demand for the US dollar, which has fallen following the decision. Investors chose to ignore Powell’s comment that the Fed did not intend to cut interest rates this year.
Attention will now turn to US jobless claims data which is expected to rise slightly to 197,000, up from 192,000 in the previous week.