- Indian Rupee (INR) is falling for a second day
- India cut consumer tax to spur consumption
- US Dollar (USD) is rising versus major peers
- US ADP payrolls, jobless claims were weaker than expected
The US dollar-to-Indian rupee (USD/INR) exchange rate rose for the second straight day. The pair rose 0.09% in the previous session, settling on Wednesday at 88.07. At 21:30 UTC, USD/INR trades 0.14% at 88.19 and traded in a range of 87.98 to 88.21.
The Rupee fell on Thursday amid strong local USD demand from local oil companies and foreign banks.
The Indian Rupee weakened after the Indian Finance Minister announced on Wednesday cuts on hundreds of consumer items ranging from soap to small cars in order to spur domestic demand.
The move is expected to boost consumption in the economy, which grew at 7.8% in the June quarter.
The simplification of the tax on consumer goods was triggered by Prime Minister Modi’s call for greater self-reliance in India, following the US lifting tariffs on Indian goods.
The US Dollar rose across the board. The US Dollar Index, which measures the greenback against a basket of major currencies, settled 0.14% to 98.28, after losses yesterday.
The USD is edging higher as investors look ahead to a key jobs report tomorrow and following a trio of jobs data, which reinforced expectations that the Fed will cut rates.
The ADP payroll report showed that 54,000 jobs were added in the private sector in August, well down from 106k in July and below the 65k that was forecast.
US jobless claims also missed forecast, rising to 237k, the highest level since June and up from 232k in the previous week.
The data support the view that the Federal Reserve will need to cut rates to support the labour market.
Attention turns to Friday’s non-farm payroll, which is expected to show that job creation remained weak at 73k and unemployment ticked higher to 4.3%.
The market is almost fully pricing in a rate cut in the September meeting.