- Indian Rupee (INR) falls with Asian peers
- Indian importers are buying dollars
- US Dollar (USD) rises versus major peers
- Fed could adopt a hawkish tilt.
The US Dollar – Indian Rupee (USD/INR) exchange rate is rising for a third straight day. The pair rose 0.13% in the previous session, settling on Tuesday at 83.00. At 11:00 UTC, USD/INR trades +0.20% at 83.17 and trades in a range of 82.96 to 83.17.
The Rupee has fallen to a two-month low against the USD amid rising dollar demand from importers, including oil firms, and broader weakness in its Asian peers.
Financial markets across the board are showing nerves ahead of the FOMC meeting, which is creating a risk-off environment. Riskier assets such as the Rupee or equities are under pressure.
Meanwhile, oil prices are hovering around a 4-month high after API crude oil inventories showed a 1.5 million barrel draw. The data comes ahead of the EIA stockpile data later today.
The US Dollar is rising across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades at +0.25% at the time of writing at 104.13 as it attempts to recover some of last week’s losses.
The US dollar is heading higher for a fifth straight day against its major peers, as investors look ahead to the interest rate this is and from the Federal Reserve later today.
The US central bank is widely expected to keep interest rates on hold at the 15-year average of 5.25% to 5.5%. However, after two consecutive months of hotter-than-expected inflation data, the Federal Reserve could adopt a slightly more hawkish tilt, pushing back on rate cut expectations.
With no change in rates expected, attention will be firmly on the central bank’s new projections and the dot plot. This is the chart that sets out policymakers’ outlook for interest rates over the coming 12 months. In December, the dot plot showed three rate cuts in 2024, which could be downwardly revised to two rate cuts, which could give the dollar a boost.
