- Indian Rupee (INR) rises after two days of losses
- India’s GDP is forecast to grow 6.8% said the IMF
- US Dollar (USD) falls versus its major peers
- Fed Chair Powell warned of a delay to rate cuts
The US Dollar Indian Rupee (USD/INR) exchange rate is falling after losses yesterday. The pair rose 0.18% in the previous session, settling on Wednesday at 83.63. At 10:00 UTC, USD/INR trades -0.05% at 83.59 and trades in a range of 83.52 to 83.75.
The Indian rupee is pushing higher against the weaker U.S. dollar after the International Monetary Fund raised India’s growth forecast for 2024 to 2025 to 6.8%, up from 6.5%. The IMF did so on the back of strong domestic demand and a rising working-age population.
The Reserve Bank of India estimated that the economy would grow at 7% in the current financial year, which started on April 1st.
This is good news for India’s serving Prime Minister Narendra Modi, as elections in the country kick off this week. This will be the first of seven phases to be held between now and the beginning of June to decide the next PM.
The US Dollar is falling across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades at -0.37% at the time of writing at 105.95, snapping two days of gains.
The U.S. dollar fell across the board on Wednesday as it tracked treasury yields lower. However, losses in the dollar were contained amid expectations that the Federal Reserve will keep interest rates high for longer.
In a speech by Federal Reserve chair Jerome Powell yesterday, the head of the US central bank warned the rate cuts might be delayed given the lack of progress in recent months amid persistently sticky inflation.
According to the CME fed watch tool, the chance of a Fed rate cut at the June FOMC meeting has dropped to just 19% from 66% at the start of the month.
The Federal Reserve Beige Book noted that the US economy had expanded slightly since late February, and firms are struggling to pass on higher costs. Some firms also mentioned a weakness in discretionary spending.
The next FOMC meeting is on April 30th, the 1st of May, and the market is not expecting the central bank to adjust monetary policy.
