- Indian Rupee (INR) hits a record low before recovering slightly
- US visa worries hit equities
- US Dollar (USD) is rebounding versus major peers
- Fed Chair Powell adopted a cautious stance
The US dollar-to-Indian rupee (USD/INR) exchange rate is unchanged after two days of gains. The pair rose 0.57% in the previous session, settling on Tuesday at 88.80. At 16:30 UTC, USD/INR trades -0.04% at 88.75 and trades in a range of 88.69 to 88.97.
The Indian rupee has fallen to a fresh record low against the US dollar amid U.S. dollar strength and as domestic equities decline for a fourth consecutive session, amid worries over US visa curbs.
Last Friday, Trump announced that the H-1 B visa fee will increase to $ 100,000. This is a visa that the Indian tech service sector leans on significantly. The IT sector is heavily reliant on the US for a significant portion of its revenue. The increase in the fee proposal is hitting demand for Indian tech stocks.
Foreign portfolio investors sold shares worth around $400 million yesterday, the highest this month, and have sold $643 million worth in four days, hitting demand for the rupee.
The US Dollar is rising against the Rupee but falling against its major peers. The US Dollar Index, which measures the greenback against a basket of major currencies, is rising 0.57% at 97.83, after two days of losses.
The US dollar is rebounding after two days of losses as the market continues to weigh up Federal Reserve chair Jerome Powell’s cautious outlook for further rate cuts.
Yesterday, Fed Chair Powell maintained a cautious stance regarding further rate cuts, noting that the Fed continues to balance the competing risks of high inflation and a weaker job market. These are two problems that require differing policy responses.
Markets are still pricing in around a 90% probability of a 25-basis-point cut at the October meeting, with another 25-basis-point reduction in December.
This week’s data, including US jobless claims, GDP, and US core PC, the Federal Reserve’s preferred gauge for inflation, will be in focus and key for shaping expectations surrounding the Fed’s next move.