- Indian Rupee (INR) holds steady for a second day
- RBI could hike rates again if oil rises
- US Dollar (USD) rises versus major peers
- Fed speakers are in focus
The US Dollar Indian Rupee (USD/INR) exchange rate is inching higher on Tuesday for a second straight day. The pair rose +0.09% in the previous week, settling on Friday at 83.21. At 16:00 UTC, USD/INR trades 0.03% at 83.23 and trades in a range of 83.10 to 83.28.
The Rupee is showing some resilience against the stronger U.S. dollar. According to investment bank Morgan Stanley, the Indian central bank, RBI, could raise interest rates again if oil prices continue to rise.
Sustained higher oil prices would mean that the Indian account deficit would likely widen, and it would also increase Indian inflation. These moves would fill the central banks need to raise interest rates again.
The Indian. Central bank hiked interest rates 250 basis points between May 2022 and February 2023 in order to fight inflationary pressures in the economy. The RBI has since held interest rates steady at 6.5% as it focuses on lowering inflation to its 4% target level.
The US Dollar is steady against the Rupee but rising versus its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades at +0.37% at the time of writing at 105.60, after booking gains across last week.
The U.S. dollar is pushing higher against its major peers, recovering for a second straight day as the market starts to question whether the Federal Reserve has really reached peak interest rates.
Minneapolis Fed President Neel Kashkari said yesterday that he believed the Fed still had more work to do to control inflation.
His comments were in contrast to the tone of the Federal Reserve interest rate meeting last week, which the market perceived to be more dovish. This, when combined with softer-than-expected U.S. jobs data on Friday, fueled bets that the Federal Reserve was done with hiking rates.
While U.S. dollar strength had previously been owing to the stronger U S economy, there are signs now that the US economy could be starting to cool, bringing it more in line with other major economies across the globe.
Looking ahead, there’s no high impacting U.S. economic data due this evening; instead attention will be on Federal Reserve speakers including Fred Williams Logan and Wallar, who are due to speak..
