- Indian Rupee (INR) is holding steady
- Indian composite PMI rose to a 4-month high
- US Dollar (USD) eases versus major peers
- US PMI data is due later
The US Dollar Indian Rupee (USD/INR) exchange rate holding steady after two days of gains. The pair rose +0.06% in the previous session, settling on Tuesday at 83.15. At 10:00 UTC, USD/INR trades -0.01% at 83.14 and trades in a range of 83.10 to 83.22.
The Indian Rupee is holding steady after India’s business activity grew at the fastest pace in four months in January thanks to stronger demand. However, the data also showed the import costs rose at the fastest pace since August.
India’s flash composite PMI rose to 61 in January, its highest level since September, and up from December’s reading of 58.5.
The data suggests that the economy grew at a faster pace, boosted by stronger manufacturing output and more robust service sector activity.
The manufacturing PMI rose to 56.9 in January, up from 54.9 in December, and the dominant service industry also sought stronger growth, with the PMI rising to 61.2, up from 59 in December.
The data supports findings that Asia’s third-largest economy could be the fastest-growing major economy in the near term and is expected to grow at 6.9% in the current fiscal year.
The US Dollar is holding steady against the Rupee but is falling 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 103.07, after two days of gains.
The US dollar is edging lower but still hovers near its highest level in six weeks after stronger-than-expected U.S. economic data last week and hawkish comments from Federal Reserve officials. Several Fed officials such as Mary Daly, San Francisco Fed president, and Fed governor Christopher Waller have suggested that it is premature to think that rate cuts are imminent.
Last week also saw retail sales come in stronger than expected and a rebound in consumer sentiment to its highest level since July 2021.
Attention now turns to U.S service sector activity data, which economists expect to is back to 51 in January, down from 51.4 in December.
Meanwhile, manufacturing PMI data is expected to hold steady at 47.9.
The level 50 separates expansion from contraction.
