- Indian Rupee (INR) hits another record low above 81.00
- Indian equities plunge
- US Dollar (USD) rises on safe haven
- US composite PMI beat forecasts
The US Dollar Indian Rupee (USD/INR) exchange rate is holding steady on Friday after four straight days of gains. The pair rose +1.45% yesterday, settling at 81.06, trading in a range between 79.93 to 81.25. At 15:00 UTC, USD/INR trades +0.00% at 81.05. The pair is set to gain 1.75% across the week.
The Rupee, along with other emerging market currencies and the Indian stock market crashed lower on Friday as risk sentiment plunged. Fears of recession surged after central banks across the globe hiked interest rates, setting the scene for slower growth and a global recession.
The Nifty 50 fell 1.7% on Friday, and the Sensex fell 1.7% amid deep risk aversion. As the Federal Reserve continues raising rates, money that was in the emerging markets will be flowing back to the USA. Foreign investors sold net $152 million of Indian equities this week.
Separately falling oil prices should offer some support to the Rupee. Oil prices tumbled 6%, with crude oil falling to $78, its lowest level since January. Recession worries are hurting the demand outlook for oil.
The US Dollar is rising across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades at +0.9% at the time of writing at 112.39. The USD is set to rise 2.5% across the week.
The US dollar is surging higher, boosted by a combination of hawkish Federal Reserve bets and safe haven flows.
Yesterday US jobless claims remained low, supporting the hawkish stance from the Fed.
Today US PMI data revealed that that business activity slowed by less than expected in September. The composite PMI was 49.3, up from 44.6 and well ahead of forecasts of 44.7. The level 50 separates expansion from contraction.
