- Indian Rupee (INR) inches higher
- Nifty 50 rises above 20,000
- US Dollar (USD) rises versus major peers
- US hovers around 3-month low
The US Dollar Indian Rupee (USD/INR) exchange rate is falling modestly after a flat finish yesterday. The pair rose +0.01% in the previous session, settling on Tuesday at 83.34. At 12:00 UTC, USD/INR trades -0.03% at 83.31 and trades in a range of 83.26 to 83.41.
The Indian Rupee is finding support from strength in domestic equities after India’s blue chip indices booked their best day in two weeks on Wednesday.
The Nifty 50 rose 1.04%, pushing above the 20,000 level for the first time since mid-September. The Sensex rose 1.1%.
High-weighted information technology and financial stocks lifted the index following dovish comments from US Federal Reserve officials overnight.
The Indian benchmarks indices are less than 1% away from their record highs reached on September the 15th.
Foreign portfolio investors have turned net buyers of Indian equities after two months, buying shares worth ₹29.01 billion as of November 28.
The US Dollar is falling against the Rupee but rising against its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades +0.05% at the time of writing at 102.81, snapping a four-day losing run.
The sell-off in the US dollar has steadied as the USD hovers around a three-month low versus its major peers amid growing expectations that the US central bank has ended its aggressive interest rate hiking cycle and could start cutting rates early next year.
The USD fell sharply yesterday after Federal governor Christopher Waller a known hawk suggested that the Fed could cut rates in the coming months. He said he was increasingly confident that policy was well positioned to cool the economy and get inflation back to the Fed’s 2% target level. He added that if inflation continued to fall, then the US central bank could start cutting rates.
After his comment, the market brought forward rate cut expectations and is now pricing in a 40% probability of a 25 basis point cut in March.
Attention will turn to tomorrow’s personal consumption expenditure price index (core PCE) which is the Federal Reserve’s preferred measure for inflation. Economists expect core PCE to ease to 3.5% YoY down from 3.7% in the previous month, and this would mark the lowest level since mid-2021.
A cooler-than-expected inflation print could raise bet that the Fed will cut rates sooner, puling USD lower.