- Indian Rupee (INR) rises after gains yesterday
- Rupee gains could be limited amid dovish RBI expectations
- US Dollar (USD) falls versus major peers
- Moody’s downgrades US credit rating
The US dollar-to-Indian rupee (USD/INR) exchange rate is falling after gains last week. The pair rose 0.11% in the previous week, settling on Friday at 85.50. At 15:30 UTC USD/INR trades -0.11% lower at 85.44 and traded in a range of 85.28 to 85.70.
The repair is riding giving bank losses from last week however the upside could be limited amid dovish RBI expectations.
Data showed that consumer inflation in India fell by more than expected to a near 6-year low last month, supporting the view that the Reserve Bank of India will extend its rate-cutting cycle. The RBI has delivered back-to-back cuts after holding its repo rate at 6.5% for a year.
Meanwhile, optimism about trade flowing between the US and China is offering some support. Last week, the US and China agreed to reduce tariffs to pre-liberation day levels.
Data from China overnight showed that industrial production cooled to 6.7% YoY, from 7.7%. Retail sales were also weaker, highlighting concerns over the health of domestic demand.
The US Dollar is falling across the board. The US Dollar Index, which measures the greenback against a basket of major currencies, is falling 0.74% to 100.35, regaining yesterday’s gains.
The US dollar is falling against its major peers after a surprise downgrade to the US government credit rating.
Moody’s cut the US sovereign credit rating by one point on Friday, making it the last major rating agency to downgrade the country. Moody’s reduced the rating to an Aa1 rating citing concerns over the country’s growing £36 trillion debt pile.
The news sent the dollar lower following four straight weeks of gains when it had been boosted by rising optimism surrounding the US trade deals and improving relations with China.
The US economic calendar is relatively quiet this week, with just US PMI data on Thursday in focus.