- Indian Rupee (INR) is falling for a second day
- Indian inflation fell to a record low
- The US Dollar (USD) falls versus major peers
- US stocks fall sharply after hawkish Fed comments
The US dollar-to-Indian rupee (USD/INR) exchange rate rose for a second straight day. The pair rose 0.14% in the previous session, settling on Wednesday at 88.59. At 21.30 UTC on Thursday, USD/INR traded 0.27% at 88.82 and traded in a range of 88.57 to 88.82.
The Rupee fell on Thursday amid a risk-off mood, as investors ditched riskier assets, including riskier FX.
The Rupee is coming under pressure despite Moody’s rating agency saying they expect India’s economy to grow at 6.5% through 2027. Analysts noted that India’s economic growth is supported by robust infrastructure spending and solid consumption, although the private sector remains cautious about business capital spending.
Meanwhile, data yesterday showed the Indian inflation tumbled to a record low of 0.25% in October, driven by a sharp fall in food prices and tax cuts on consumer goods. The data paves the way for a central bank rate cut next month.
Low inflation, declining interest rates, and consumer tax cuts seem to offset pressure on Asia’s third-largest economy after the US imposed 50% tariffs on Indian exports.
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 trading -0.33% at 99.17, after modest gains yesterday.
The U.S. dollar fell on Thursday as the US government reopened following the longest shutdown on record. The House of Representatives passed a bill, which Trump then signed into law.
However, there is still considerable uncertainty about when the data will be released.
Fed speakers were also hawkish, with Susan Collins, Alberto Musalem, and Beth Hammack stating that they favoured keeping interest rates steady. The market is questioning whether the Fed would cut rates in December or wait until there is more timely data next year.
US stock markets’ mood soured with US equities falling sharply as treasury yields rose. However, the USD fell despite rising yields and hawkish Fed bets.