- Indian Rupee (INR) rises to a 3-week high
- FII’s sell out of Indian stocks
- The US Dollar (USD) falls versus major peers
- Fed Chair Powell hints to further rate cuts
The US dollar-to-Indian rupee (USD/INR) exchange rate is falling after small gains yesterday. The pair rose +0.13% in the previous session, settling on Tuesday at 88.78. At 21:30 UTC, USD/INR trades -1.0% lower at 87.86 and trades in a range of 87.88 to 88.75.
The Indian Rupee rose to a three-week high against the USD amid dovish Fed expectations and as the INR is supported by suspected intervention from the Reserve Bank of India, to prevent the Rupee from passing its all-time high of 89.10.
Ongoing outflows of foreign funds from the Indian stock market could limit gains in the Rupee. Yesterday, Foreign Institutional Investors (FII) sold shares worth Rs 1,508.53 crores in the Indian stock market. Overseas invesors have been selling out of Indian stocks amid concerns over the ongoing trade tensions between the US nd India.
Despite these trade tensions, the IMF has raised India’s growth target for the current fiscal year to 6.6%, up 0.2% from the previous forecast.
The US Dollar is falling against its major peers. The US Dollar Index, which measures the greenback against a basket of major currencies, is trading down 0.37% at 98.68, extending yesterday’s losses.
The U.S. dollar is falling for a second straight day after a dovish stance from Federal Reserve chair Jerome Powell in his speech.
Powell signaled that another 25-basis-point rate cut is likely to be delivered in October, even as the ongoing government shutdown significantly reduces the data being released and therefore the information with which to make a decision.
Powell said that the economic outlook appeared unchanged since policymakers met in September, when they lowered interest rates and forecast two more rate cuts this year.
The market is pricing in a 93% chance of 50 basis points worth of cuts before the end o the year, meaning a cut in October and another in December.