- Indian Rupee (INR) eases after gains last week
- Foreign equity inflows are on track to reach record levels
- US Dollar (USD) holds steady after steep losses
- A dovish Fed dragged USD lower last week
The US Dollar Indian Rupee (USD/INR) exchange rate rose at the start of the week after losses last week. The pair fell 0.2% in the previous week, settling on Friday at 83.02. At 17:00 UTC, USD/INR trades +0.12% at 83.14 and trades in a range of 82.92 to 83.15.
The rupee strengthened last week thanks in part to surging equity inflows. Foreign Investors bought up $1 billion worth of Indian shares on Friday, according to provisional data. This comes after $1.5 billion of shares were purchased from Monday to Thursday. Foreign inflows in December are on track to be the highest this year.
Today, Indian domestic equities fell after rallying to record highs across most of this month.
Banking stocks weighed down the index which closed the nifty 50 closed 0.18% lower whilst the Sensex dropped 0.24%.
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 +0.00% at the time of writing at 102.50, after losses last week.
The US dollar is holding steady after steep losses in the previous week. Last week, the US dollar index fell 1.4% after the Federal Reserve left interest rates on hold as expected but indicated that it would cut rates three times in 2024, which was above the two rate cuts that had been projected in the September meeting.
The dovish tilts by the Federal Reserve pulled the US dollar to a four-month low versus its major peers.
Attention now turns to several data releases this week and the final full week of trading ahead of the Christmas break.
Investors will be watching Q3 GDP data, the final reading, jobless claims and housing starts. However, the biggest focus will be on Friday. It’s called the PCE index, the Federal Reserve’s preferred gauge for inflation.
Expectations are for the gauge to tick lower again to 3.3% year on year, down from 3.5% in October.
Cooling inflation would support the view that the Federal Reserve will cut rates next year.
