- Indian Rupee (INR) falls after gains yesterday
- Indian foreign institutional investors are net sellers
- The US Dollar (USD) is rising versus major peers
- Uncertainty over the outlook of the Iran war lifts USD
The US dollar-to-Indian rupee (USD/INR) exchange rate is rising after losses yesterday. The pair fell -0.15% in the previous day, settling on Wednesday at 93.90. At 18:30 UTC on Thursday, the pair is up 0.35% to 94.23 and trades between 93.80 and 94.23.
The Indian rupee rose to a record high on Friday after Indian markets were closed on Thursday for Ram Navami celebrations. However, weakness in the rupee has been driven by continued foreign fund outflows from the Indian stock market, along with a sharp recovery in oil prices as investors grow increasingly sceptical about a quick resolution to the Middle East conflict.
So far in March, oil prices have risen by around 40%, which has had a significant impact on countries such as India, which imports nearly 80% of its oil requirements. Meanwhile, foreign institutional investors have remained net sellers on every trading day this month, offloading stocks worth ₹1,07,009.53 crore.
The US dollar is rising across the board. The US Dollar Index, which measures the currency against a basket of major peers, is up 0.25% at 99.85, marking a third straight day of gains.
The U.S. dollar has been strengthening on safe-haven demand, as reflected in the sharp sell-off in U.S. equity markets. The S&P 500 traded more than 1% lower on Thursday. Meanwhile, tensions with Iran appear no closer to de-escalation. Although Iran has said it is considering Trump’s 15-point ceasefire plan, it has shown no interest in direct negotiations.
Attention remains firmly on geopolitical headlines, even as the OECD warns that the Middle East conflict has knocked the global economy off a stronger growth path. On the data front, figures showed that U.S. unemployment claims rose slightly last week, suggesting the labour market remains relatively stable and giving the Federal Reserve room to leave interest rates unchanged while monitoring the economic impact of the conflict.
