- Indian Rupee (INR) slips at the start of the week
- Nifty 50 rises to an intraday high of 20702.
- US Dollar (USD) holds steady after losses last week
- US factory orders data is due
The US Dollar Indian Rupee (USD/INR) exchange rate is rising after modest losses last week. The pair fell -0.1% in the previous week, settling on Friday at 83.21. At 12:00 UTC, USD/INR trades +0.14% at 83.37 and trades in a range of 83.14 to 83.37.
The Indian Rupee is falling lower on Monday amid a slight recovery in the US dollar and amid strong dollar demand from local companies, which overshadowed the strong demand for domestic equities, which rose to a record high.
Indian equities rose to a fresh record high following wins for Prime Minister Narendra Modi’s party in the state elections. The results have boosted market sentiment and eased fears of fiscal populism ahead of the national elections in 2024.
The nifty 50 rallied by over 2%, touching an intraday record high of 20,702.
Even so, the Rupee appears to be shrugging off positive developments and the U.S. dollar’s steep losses last month. The USD fell over 3% in November versus its major peers, whilst the Rupee remained roughly steady.
The US Dollar is rising against the Rupee but is holding steady versus its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades +0.01% at the time of writing at 103.27, after modest losses last week.
The US dollar is holding steady after booking losses in the previous week. The US dollar fell against its major peers for a third to straight week, dropping to a three-month low on expectations that the Federal Reserve has ended its aggressive interest rate hiking cycle and will soon begin to cut rates.
The market has shrugged off comments by Federal Reserve Chair Jerome Powell on Friday when he pushed back on expectations of rate cuts. However, he also added that interest rates were well into restrictive territory, which helped fuel, but inflation would continue falling.
The market is currently pricing in a 60% probability of an interest rate cut in March, which was 20% just a week ago.
Attention now turns to US factory orders data which is expected to show up that orders fell 2.5% month on month in October after rising 2.8% in November.
Signs of weakening data add to the evidence that US economy is starting to cool, driving rate-cut bets.
Looking ahead payroll report on Friday will be the central focus.
