inr-bank-notes - INR
  • Indian Rupee (INR) falls for a second day
  • China GDP grew less than expected
  • US Dollar (USD) rises after hawkish Fed commentary
  • US retail sales data is expected to rise 0.4%

The US Dollar Indian Rupee (USD/INR) exchange rate is rising for a second straight day. The pair rose 0.31% in the previous session, settling on Tuesday at 83.08. At 11:00 UTC, USD/INR trades +0.07% at 83.14 and trades in a range of 83.03 to 83.18.

The Indian Rupee is heading lower along with its Asian peers after China’s GDP raised concerns over the economic recovery in Asia’s largest economy.

China’s GDP grew 5.2% in 2023, slightly more than the official target of 5% but below expectations of 5.3%.

Data confirms that the deepening property crisis and mounting deflationary risks, along with cooling demand, could weigh on the outlook for the economy in the coming year.

Other data from China showed that industrial production came in ahead of forecasts, but retail sales rose by less than expected, rising 7.4%, down from 10.1% in November, but also against favorable comparisons.

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 +0.03% at the time of writing at 103.37, after gains in the previous session.

The US dollar is heading higher for a second straight as investors reassess the likelihood that the Federal Reserve will start cutting interest rates early this year.

After rate cut expectations surged at the end of last year, the market is taking a more measured approach at the start of 2024.

Hawkish comments by Federal Reserve officials have lifted the dollar to a one-month high versus its major peers. Federal Reserve’s Christopher Waller said that while the US is close to the Fed’s 2% inflation goal, the Fed should not rush toward cuts until inflation is clearly unsustainably below 2%

Market expectations of a March rate cut have called to 60% versus 75% yesterday, according to the CME’s Fed Watch tool.

Looking ahead, attention is to retail sales data which is expected to rise 0.4% month on month ahead in December after rising 0.3% in November. Stronger than forecast US retail sales data could fuel expectations of a soft landing in the US and could see traders push rate cut beds back further.