- Indian Rupee (INR) is falling modestly
- Indian equities rally on US nd RBI rate cut expectations
- The US Dollar (USD) is falling versus major peers
- Fed rate cut expectations keep climbing
The US dollar-to-Indian rupee (USD/INR) exchange rate is rising modestly. The pair rose 0.01% in the previous session, settling on Tuesday at 89.15. At 19:30 UTC on Wednesday, the pair trades +0.05% at 89.18.
The Indian rupee slipped modestly on Wednesday, despite a broad risk-on market mood that helped Indian equities rally. Stocks have been boosted by expectations of a December US rate cut and a possible Reserve Bank of India rate reduction announcement next week.
The Rupee, as well as rate-sensitive shares, are impacted by record low inflation in India and comments from the RBI governor signalling room for further rate cuts next week.
Meanwhile, oil prices are offering support. Oil trades at its lowest level in about 5 weeks as Russia and Ukraine make progress towards a peace deal. Given that India imports over 80% of its oil, lower oil prices are beneficial.
The US Dollar is rising against the Rupee but is falling against its major peers. The US Dollar Index, which measures the greenback against a basket of major currencies, is trading -0.06% at 99.60, falling for a third day.
The US dollar is falling again on Wednesday amid rising expectations that the Federal Reserve will cut interest rates again in December, according to data.
On the one hand, US jobless claims fell to 216,000 in the period ending November 22, marking a third straight decline to the lowest level since February, when expectations had been for an increase to 225k.
Meanwhile, US durable goods orders rose 0.5% in September, more than the 0.3% expected, but still down from 3% in August.
The data comes after weak-than-expected retail sales and consumer confidence yesterday, and following dope dovish commentary from several Fed officials in recent sessions.
Tomorrow is Thanksgiving break in the US, and the markets are closed, so volumes in the FX markets will likely be lower, as is the case on Friday.