inr-bank-notes - INR
  • Indian Rupee (INR) falls as oil rises 6%
  • Indian manufacturing PMI rises to 56.4
  • US Dollar (USD) falls versus major peers
  • US ISM manufacturing PMI is due

The US Dollar Indian Rupee (USD/INR) exchange rate is rising, reversing losses from the previous session. The pair fell -0.2% last week, settling on Friday at 82.16. At 10:00 UTC, USD/INR trades +0.20% at 82.32 and trades in a range of 82.18 to 82.50.

The Rupee is falling after OPEC+ unexpectedly cut oil production by over 1 million barrels per day, adding to the previously agreed cut of 2 million. The move has pushed oil prices sharply higher on Monday with West Texas Intermediate trading 6% higher at $80 per barrel.

Given that Indian imports 80% of its oil need, higher oil prices are bad news for the economy.

Separately, India’s manufacturing sector expanded at the quickest pace in three months in March amid improved output and rising new orders. The manufacturing PMI rose to 56.4 in March, up from 55.3 in February. This is also above the 50 level, which separates expansion from contraction. This data suggests that demand for Indian goods remains strong.

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 -0.08% at the time of writing at 102.44, extending losses from last week.

The USD is edging lower, reversing gains from earlier in the day. The USD initially moved higher following the news that OPEC plus cut oil production as investors priced in higher inflation on the back of rising oil prices.

The market is now pricing in a 60% probability of a 25-basis point rate hike in May, up from 48% on Friday.

Data on Friday showed that US core PCE, the Fed’s preferred gauge for inflation, unexpectedly cooled on Friday to 4.6% year on year, down from 4.7%.

Looking ahead, attention is now on the US ISM manufacturing PMI data which is expected to show that activity contracted further to 47.5 from 47.7.