- Indian Rupee (INR) is boosted by comments from RBI’S Governor Shaktikanta Das
- Domestic equity markets rise
- US Dollar (USD) investors expect a dovish speech from the Fed’s Jerome Powell
- Could pre-announce policy shift to AIT
The US Dollar Indian Rupee exchange rate is falling after two session at approximately the same level. The pair hardly moved on Tuesday and Wednesday settling in the previous session at 74.21.
At 10:15 UTC, USD/INR, trades -0.4% at 73.91, slightly up from the 5-month nadir of 73.79 reached earlier in the session.
The Indian Rupee shot higher after the Reserve Bank of India (RBI) Governor Shaktikanta Das confirmed that the central bank had more ammunition to support the Indian economy through the coronavirus crisis. Mr Das said that the RBI had not exhausted its resources, either interest rate cuts or other policy tools to deal with the coronavirus hit to the economy.
Domestic equity markets are trading higher with both the Sensex and the Nifty 50 trading on higher ground. Foreign institutional investors were net buyers in the capital markets offering support to the Rupee.
The US Dollar is trading lower across the board as investors wait anxiously for Federal Reserve Chair Jerome Powell’s speech as the Jackson Hole symposium. Owing to coronavirus this will be a virtual event.
This is expected to be a pivotal speech where the Fed will aim for interest rates to be kept lower for longer.
The speech comes following a two-year review by the central bank into its own practices and policies. Jerome Powell is expected to pre-announce the outcome of this review which could to the adoption of Average Inflation Target (AIT). This is a mechanism which would see the Fed allow inflation to run over 2%, making up for periods when inflation has run below 2%.
An announcement on AIT could send the Dollar lower. However, as it is expected the fall could be slight. If, however, Jerome Powell does not hint towards AIT then the US Dollar could rise sharply.
