• Indian Rupee (INR) holds steady despite a strong USD
  • RBI sees sustained growth momentum in Q1
  • US Dollar (USD) rises on hawkish Fed bets
  • PMI data beat forecasts

The US Dollar Indian Rupee (USD/INR) exchange rate is holding steady after small losses in the previous session. The pair fell -0.5% yesterday, settling on Monday at 82.84. At 15:30 UTC, USD/INR trades -0.01% at 82.81 and trades in a range of 82.75 to 82.92.

According to the Reserve Bank of India the economy and has managed to sustain growth momentum which was seen in the final fiscal quarter of 2022/23 and inflation appears to be improving at faster rate than expected.

The central bank, in its monthly Bulletin report, said Q1 growth of fiscal year 2023/24 is expected to be driven by private consumption, as well as a revival in rural demand and a rebound in manufacturing as cost pressures ease. The RBI’s said that investment activity could also improve.

GDP growth or 2023/24 is expected at 7.6%, according to the RBI. India’s annual inflation cooled to 4.7% in April from 5.66% in March.

The US Dollar is steady against the Rupee but is rising versus major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades +0.28% at the time of writing at 103.49, after booking gains of 0.07% in the previous session.

The US dollar is pushing higher amid uncertainties surrounding the US ceiling discussions and after hawkish Federal Reserve comments.

Known hawk St. Louis Federal Reserve President James Bullard said that he sees two more interest rate hikes from the US central bank. Meanwhile, Minneapolis Federal Reserve President Neel Kashkari was also hawkish saying that even if the Federal Reserve did pause interest rate hikes in June they may need further rate hikes thereafter.

Also boosting the USD was stronger than expected PMI data. The US composite PMI, which is often considered a good gauge for business activity, unexpectedly rose to 54.5 in May up from 53.4. Forecasts had been for a decline 50. Strong data raises the prospect of further rate hikes.