- Indian Rupee (INR) falls for a third day
- Indian domestic equities fall as sentiment sours
- US Dollar (USD) rises versus major peers
- US PMIs point to solid growth
The US dollar-to-Indian rupee (USD/INR) exchange rate rose for a third straight day. The pair rose 0.07% in the previous session, settling on Wednesday at 85.60. At 21:30 UTC USD/INR trades 0.39% higher at 85.93 and traded in a range of 85.48 to 86.07.
The Indian rupee has fallen sharply, tracking Indian shares lower, tracking global losses as US debt worries and rising treasury yields hurt investor sentiment. The Nifty 50 fell 0.82%, while the BSE Sensex dropped 0.79%. Other Asian markets also declined amid worries that Trump’s new tax and spending bill could add between $3 and $5 trillion to the $36 trillion U.S. debt.
Meanwhile, Indian data was supportive after PMI figures said that India’s private sector activity accelerated its fastest pace in over a year in May, boosted by strength in the service sector, even as price pressures increased. The composite PMI, a good gauge for business activity, rose to 61.2 up from April’s 59.7, marking the sharpest rate of increase since April last year.
The US Dollar is rising across the board. The US Dollar Index, which measures the greenback against a basket of major currencies, is rising 0.38% to 99.93 after three days of losses.
The US dollar is rising, boosted by an unexpected rise in U.S. business activity. The composite PMI, which is considered a good gauge for business activity, rose to 52.1 in May, up from 50.6 in April. Delving deeper into the figures, the service sector rebounded to 52.3, up from 50.8. Meanwhile, the manufacturing sector varied to 52.3, up from 50.2. Economists had expected a fall to 50.1.
The improvement in May marks a turnaround from the April slump and has largely been attributed to improved sentiment following the suspension of Liberation Day tariffs.
However, this could be customers attempting to front-run orders to avoid any potential new tariff shocks from the administration when the 90-day truce expires in July.
Meanwhile, gains could be limited after Trump’s big, beautiful bill was approved by the Senate, sending treasury yields soaring amid concerns over the US debt pile.