inr-bank-notes - INR
  • Indian Rupee (INR) as risk sentiment falters
  • Oil prices offer support
  • US Dollar (USD) rises ahead of Powell’s speech
  • Could Powell hint to a 75 basis point hike?

The US Dollar Indian Rupee (USD/INR) exchange rate is rising on Thursday, paring losses from yesterday. The pair fell -0.4%% yesterday, settling at 79.63 after trading in a range of 79.59 to 79.97. At 14:00 UTC, USD/INR trades +0.15 at 79.75.

The Indian Rupee has pared earlier gains after US dollar demand from importers and oil companies weighed on the Rupee.

Concerns over the economic outlook for China continue to weigh on risk sentiment. China is extending COVID lockdown restrictions with no let-up in its strict zero-COVID policy.

Falling oil prices had also supported the Rupee. Oil fell 5% at one point as fears over the demand outlook dragged on the prices. West Texas Intermediate dropped to an 8-month low of $81.20 before rising back up to $83.50.

The US Dollar is rising across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades +0.20% at the time of writing at 110.18, paring some losses from the previous session.

The USD fell yesterday after the Federal Reserve Beige book provided evidence that US economic growth could be slowing and inflation in some districts falling. The data helped ease fears that the Fed would continue hiking interest rates aggressively. Treasury yields fell and continue falling today.

However, the US is now rising again on safe-haven flows after the ECB raised interest rates by 75 basis points, raising fears over the economic outlook for the region.

Attention is now firmly on Federal Reserve Chair Jerome Powell, who is speaking ahead of the FOMC in a few weeks. The market will be watching closely for clues and hints as to whether the US central bank is considering a 0.5% or 0.75% hike later in the month.

Investment bank Goldman Sachs upped rate hike bets to 75 in September and 50 in November.