- Indian Rupee (INR) falls after 3-days of gains
- Losses could be limited ahead of joining of EM bond index
- US Dollar (USD) is rising against its major peers
- Hawkish Fed comments lift the USD
The US Dollar Indian Rupee (USD/INR) exchange rate is falling after three days of losses. The pair fell 0.06% in the previous session, settling on Tuesday at 83.40. At 20:00 UTC, USD/INR trades 0.19% at 83.58 and is in a range of 83.41 to 83.61.
The Rupee is falling as local demand for the U.S. dollar increases due to the expiry of monthly currency futures contracts.
However, the Indian Rupee is likely to see the losses limited owing to expectations of strong foreign inflows as Indian bonds are set to enter the JP Morgan emerging market bond index later this week.
Foreign investors have already invested around $10 billion in securities eligible to join JP Morgan’s index, and analysts at Goldman Sachs anticipate at least $30 billion more in inflows in the coming months as India’s weighting in the index rises to 10%.
Meanwhile, the rise in crude oil prices amid expectations of strong summer driving demand could pressure the Indian rupee. India is the world’s third-largest oil consumer after the US and China and is significantly impacted by changes in oil prices.
The US Dollar is rising across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades +0.142% at the time of writing at 106.05, marking its second day of gains.
The US dollar is pushing higher against its major peers, rising after hawkish comments from Federal Reserve speakers ahead of Friday’s inflation data.
Federal Reserve governor Michelle Bowman warned that the central bank might not need to cut interest rates this year and reiterated that the Fed was in no rush to start reducing right.
Her comments come as the market was pricing in two interest rate cuts by the US Federal Reserve this year despite the central bank projecting one cut in 2024 in the meeting earlier this month.
The U.S. economic calendar has been relatively quiet this week, but that is set to change tomorrow, as US jobless claims, durable goods orders, and Q1 GDP figures are all in focus.
Jobless claims could be the most closely watched for further claims over any signs of weakening in the US jobs market.
Economists expect jobless claims to ease slightly to 236k, down from 238k. Weaker-than-expected claims could pull the US dollar lower.
