- Indian Rupee (INR) falls for a fourth day
- Oil and gas prices jump again on Middle East tensions
- The US Dollar (USD) is rising versus major peers
- US inflation worries push Fed rate cut bets lower
The US dollar-to-Indian rupee (USD/INR) exchange rate is rising for the fourth day in a row. The pair rose 0.56% in the previous session, settling on Monday at 91.58. At 21:30 UTC on Tuesday, the pair is down +0.51% to 90.05.
Indian Rupee trades under pressure amid rising concerns over energy supplies.
Indian companies reduced natural gas supplies to industries amid expectations of tighter supply after the top producer, Qatar, halted production.
Furthermore, surging oil prices are also bad news for India, which imports around 80% of its energy needs. Oil prices have risen 15% so far this week, rising to the highest level since June last year. Energy supply worries have risen sharply as Iran warned vessels not to cross the Strait of Hormuz, a key chokepoint for oil and gas, driving up prices globally.
The US Dollar is rising across the board. The US Dollar Index, which measures the US dollar against a basket of major currencies, is up 0.68% to 99.05, after two days of gains.
The US dollar extended Monday’s rally on Tuesday as oil prices soared to an 8.5 month high sting inflation expectations, along with the probability of additional Federal Reserve rate cuts supporting the dollar
The market is now pricing in 37 basis points of Fed rate cuts this year, down from 60 basis points last Friday.
Furthermore, the sell-off in U.S. stocks also helped boost liquidity demand for the US dollar, yes, and the S&P 500 closed almost 1% lower.
New York Fed President John Williams said additional Fed rate cuts would be necessary if inflation slows further.
Looking ahead, attention will remain on Middle East development. ISM services PMI data is also due ahead of nonfarm payrolls later in the week.