- Indian Rupee (INR) rises for a second
- RBI cut the CRR rate by 50basis points
- US Dollar (USD) rose last week against peers
- US non-farm payroll rises 227k
The US Dollar Indian Rupee (USD/INR) exchange rate is falling for a second day. The pair fell -0.01% in the previous session, settling on Thursday at 84.868. On Friday at 21:30 UTC, USD/INR trades -0.02% at 84.66 and traded in a range of 84.52 to 84.71. The pair trades 0.13% across the week.
Reserve Bank of India kept its key interest rate unchanged on Friday but reduced the reserve ratio that banks are required to hold for the first time in four years, effectively easier monetary conditions as economic growth.
The cash reserve ratio (CRR) was reduced by 50 basis points to 4%, effective in two tranches on December 14th and December 28. This was the first such move since March 2020 and will inject ₹1.16 trillion into the banking system.
India’s GDP fell unexpectedly to 5.4% in the July-September quarter, marking its slowest pace of growth in seven quarters. Meanwhile, inflation is heating up again, and the Rupee has fallen to record lows. This effectively limits the amount of action that the RBI can take heading into what could be a challenging 2025.
The US Dollar is falling against the Rupee but rising against its major peers. The US Dollar Index, which measures the greenback against a basket of major currencies, rose 0.3%, trading at 106.06 on Friday, after losses in the previous session. The USD rose 0.3% across the week.
The US nonfarm payrolls showed that 227 jobs were added in November. This was up from an output Lee revised 36,000 in October and was ahead of forecasts of 200,000. Meanwhile, unemployment picked up by more than expected 24 points 2%, up from 4.1%. Delving deeper into the figures, the data also shows that full-time workers fell again, while part-time employment continued to rise.
This data suggests that weakness is creeping into the US labour market, keeping the 25-basis-point December rate cut a likely outcome of the meeting on 18 December.