- Indian Rupee (INR) rises from record low
- Indian GDP this fiscal quarter is forecast between 6.5% -7%
- US Dollar (USD) is falling against its peers
- Biden steps down from the election campaign
The US Dollar Indian Rupee (USD/INR) exchange rate is falling after gains last week. The pair rose 0.25% in the previous week, settling on Friday at 83.72. At 21:00 UTC, USD/INR trades -0.06% at 83.76 and is in a range of 83.64 to 83.74.
The Indian government has taken a more cautious stance than economists on the outlook for growth in the current fiscal year, forecasting that the world’s fifth-largest economy will expand between 6.5% and 7%.
This projection from the finance ministry’s economic division is below the 8.2% growth seen in the year ending March and was a weaker estimated range than the 6.8% -7.2% that private economists have guided for. The Reserve Bank of India is also more upbeat and forecasts growth of 7.2%.
Growth forecasts come ahead of Prime Minister Narendra Modi’s budget. The newly elected Prime Minister is widely expected to lift tax receipts and use a $25 billion dividend from the central bank to ramp up spending amid concerns about uneven economic growth.
Meanwhile, the report said that inflationary pressures had eased in line with the declining commodity prices and easing supply chain pressures.
The US Dollar is falling across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades -0.1% at the time of writing at 104.30, after gains across the previous week.
The US dollar is falling lower as the market digests the news that Biden will no longer be a candidate in the November presidential election.
Over the weekend, Biden announced his decision to step down from the election race and endorsed his vice president, Kamala Harris, as the Democratic nominee.
Support for Kamala Harris has been strong and it’s looking likely that she could win the nomination, although this won’t be known until later in August, creating some uncertainty.
Kamala Harris is considered a tougher candidate against Trump in the elections but is still well behind him in the polls. Although three months is a long time in US politics, there is a lot of work to be done to boost her popularity before voting in the autumn.
The market has had a mixed reaction to the news, with the dollar falling, unwinding some of the trump trade. The Trump trade helped lift the dollar by 0.3% last week as expectations of protectionist policies are likely to be inflationary.
Looking ahead this week, US political developments will remain in focus, and core PCE on Friday, which could support the view that the Federal Reserve will cut rates.
