- Indian Rupee (INR) falls after gains yesterday
- Indian composite PMI (business activity) fell to 53.8
- The US Dollar (USD) is rising versus major peers
- US business activity fell to an 11-month low
The US dollar-to-Indian rupee (USD/INR) exchange rate is rising after losses yesterday. The pair fell -0.51% in the previous day, settling on Monday at 93.21. At 18:30 UTC on Tuesday, the pair is up 0.95% to 94.09.
The Indian rupee has fallen sharply amid rising oil prices and weaker economic data.
Figures show that India’s private sector expanded at its slowest pace in over three years in March, as price shocks from the US–Israel conflict with Iran weighed on domestic demand, despite international orders hitting a record high.
India’s composite PMI, a key gauge of business activity, fell to 56.5 this month, well below forecasts of 59 and February’s reading of 58.9.
The manufacturing sector bore the brunt of the slowdown, with its PMI sliding to a four-and-a-half-year low of 53.8 from 56.9, as the Middle East conflict fuelled uncertainty and dragged factory output growth to its weakest level since 2021.
Meanwhile, the services sector — which accounts for the majority of India’s GDP — also lost momentum, with the PMI easing to 57.2 from 58.1.
The US dollar is rising across the board. The US Dollar Index, which measures the currency against a basket of major peers, is up 0.63% at 99.57, after losses yesterday.
The US dollar is rising against its major peers as investors weigh conflicting signals over potential de-escalation in the Iran conflict, while oil prices climb back towards $100 a barrel.
Markets are also digesting mixed US data, which showed that business activity slowed to an 11-month low in March as rising energy costs weighed on input prices.
The US composite PMI fell to 51.4, its lowest level since April last year. Services activity weakened to 51.1 from 51.7, while manufacturing surprised to the upside, rising to 52.4 from 51.6, defying expectations of a decline.
However, with oil prices up around 30% since the start of the conflict and gasoline prices rising sharply, inflation concerns are building. The prices paid index jumped to 63.2 from 60, suggesting that higher costs are likely to be passed on to consumers.
