• Indian Rupee (INR) rose for a second day
  • Indian deficit is 55% of the annual target
  • US Dollar (USD) rises versus major peers
  • FOMC rate decision is due later

The US Dollar Indian Rupee (USD/INR) exchange rate is falling for a second straight day. The pair fell -0.02% in the previous session, settling on Tuesday at 83.12. At 12:00 UTC, USD/INR trades -0.12% at 83.05 and trades in a range of 83.00 to 83.12.

The Indian Rupee is rising after data showed that India’s fiscal deficit for the first nine months of the 2023/24 financial year was ₹9.82 trillion, which equates to around 55% of the estimate for the whole year.

Net tax revenue for April to December was ₹17.30 trillion or about 74% of the annual estimate, and this was up from 15.56 trillion rupees in the same period last year.

Total expenditure for the period was ₹30.54 trillion, which equates to around 68% of the annual amount, up from ₹28.18 trillion in the same period last year.

Attention will now turn to the pre-election budget, which will be unveiled on Thursday and where Prime Minister Narendra Modi is expected to be fiscally prudent.

The US Dollar is falling versus the Rupee but rising against its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades +0.11% at the time of writing at 103.51, after losses yesterday.

The US dollar is edging higher and is heading for its largest monthly gain since September ahead of today’s Federal Reserve interest rate decision.

U.S. dollar index has risen 2.1% versus its major peers this month as the market lowered expectations on the speed and size of US rate cuts this year in light of strong economic data and hawkish commentary from central bankers.

The market is expecting the Fed to leave interest rates on hold at a 22 year high of 5.25% to 5.5% but could flag future counts by adjusting its language to and dropping any language suggesting further hikes.

All eyes will be on the press conference by Federal Reserve chair Jerome Powell and any guidance that he gives regarding future the future path for interest rates.

The market is currently pricing in around a 45% probability of the Fed cutting rates in March this is down from almost 90% at the end of last year.

Ahead of the meeting, US ADP private payroll data came out and showed the number of payrolls rose by I07K well below the 145 K forecast and down from 158K in December.