- Indian Rupee (INR) is falling for a second day
- Caution reigns ahead of election results
- US Dollar (USD) falls versus its major peers
- US consumer confidence rises
The US Dollar Indian Rupee (USD/INR) exchange rate is rising for a second straight day. The pair rose 0.05% in the previous session, settling on Monday at 83.10. At 19:00 UTC, USD/INR trades +0.09% at 83.21 and trades in a range of 83.09 to 83.21.
The Indian rupee is under pressure after failing to pass the critical 83 hurdle amid market caution and ahead of the national election results on June 4th, which comes ahead of an exit poll on June 1st, adding uncertainty.
Opinion polls predict a victory for Prime Minister Narendra Modi’s party, which could help boost the Rupee. However, concerns regarding lower voter turnout and election fatigue have raised questions over the margin of that win.
Uncertainty surrounding the elections has seen foreign investors withdraw $2.8 billion from Indian equities in May.
The US Dollar is rising against the Rupee but falling versus its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades at -0.02% at the time of writing at 104.58, after losses in the previous session.
The U.S. dollar index is falling against its major pairs on Tuesday ahead of key US inflation data later in the week, which could impact expectations for the Federal Reserve’s monetary policy outlook.
The U.S. dollar fell despite consumer confidence Rising for the first time in four months. The Conference Board consumer sentiment index rose in May as views about business conditions on the labour market were less negative. The gauge rose to 102, upwardly revised from 97.5 in April, beating S estimates of a decline to 96.
Despite today’s increase, confidence had been trending lower in recent months as inflation remains sticky and household debt hit a record high. However, the report also showed that consumers perceived an increased likelihood of recession next year.
Improved consumer confidence often goes hand in hand with stronger spending.
Looking ahead, the key focus for the US dollar this week will be cool PCE data due to be released on Friday, which is the preferred gauge for inflation. The data comes after a string of Federal Reserve officials had warned they want to see improving inflation data for several months before cutting interest rates.
