- Indian Rupee (INR) rises after losses yesterday
- India’s GDP was revised higher to 7%
- US Dollar (USD) is rising against major peers
- US retail sales ex-auto rose 0.4%
The US Dollar Indian Rupee (USD/INR) exchange rate is falling after two days of gains. The pair rose 0.09% in the previous session, settling on Monday at 83.54. At 19:00 UTC, USD/INR trades -0.05% at 83.54 and is in a range of 83.53 to 83.60.
The International Monetary Fund (IMF) raised India’s growth forecasts for the years 2024 to 2025 to 7% from 6.8%.
The IMF upwardly revised the growth forecast on the back of improving private consumption, particularly in rural India.
At the same time, the IMF left its growth estimates for the world’s third-largest economy unchanged at 6.5% for the years 2025 to 2026.
Overall, the IMF said it still expects the world economy to grow at 3.2% this year, unchanged from its previous forecast and a tick lower from the three-point 3% growth seen in 2023.
The US Dollar is falling against the Rupee but rising versus its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades +0.09% at the time of writing at 104.32, marking the second day of gains.
The US dollar is rising as the focus remains on Trump and the latest retail sales data. The Trump trade is supporting the dollar as the market increasingly expects Trump to win the elections in November and implement protectionist policies, which could add inflationary pressures.
Meanwhile, the latest retail sales data showed that retail sales were unchanged at 0% percent after rising by 0.3% month on month in May. However, retail sales, excluding auto sales, rose by 0.4%, the most significant increase in three months, a sign that the US consumer was on a solid footing at the end of the first quarter.
Even so, the market still believes the Federal Reserve will cut interest rates in September. After US inflation cooled in June by more than expected and after dovish commentaries from Fred Powell at the start of the week, the market is now pricing in a 25 basis point rate cut with 100% certainty.
Looking ahead, there is no major data release for the rest of today. Attention will turn to US building permits, industrial output, and the fed’s Beige Book, which will be released tomorrow.
