- Indian Rupee (INR) edged higher as Evergrande risks ease
- Domestic equities also rally
- US Dollar (USD) traces treasury yields higher
- US durable goods orders due
The US Dollar Indian Rupee (USD/INR) exchange rate is heading lower on at the start of the week, paring gains from last week. The pair rose +0.23% in the previous week, settling on Friday at 73.81. At 11:30 UTC, USD/INR trades -0.15% lower 73.70.
The Indian Rupee is gaining ground in risk on trade. Fears over debt-ridden Evergrande and widespread contagion are receding which is boosting demand for riskier assets and currencies such as the Indian Rupee.
The People’s Bank of China injected 100 billion yuan ($15.5 billion) into the financial system on Monday adding to 320 billion last week, to support the system amid concerns that China’s second largest property developer Evergrande could default.
Separately, domestic equities are on the rise with both the Nifty 50 and the Sensex in the black helped by gains in automakers and banking stocks.
The US Dollar is trading lower versus the Rupee but is gaining ground versus its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies trades +0.15% at the time of writing at 93.45 after booking gains of 0.14% across last week.
The US Dollar is on the rise despite risk on trade as it traces US treasury yields higher. Following from a more hawkish Fed in the previous week, expectations of a rate rise are increasing. The Fed announced last week that it could start tapering bond purchases as soon as November, paving the way for a sooner hike to interest rates.
Attention now will turn to the US durable goods orders release later today. Analysts are expected durable goods orders to rebound in August, rising 0.7% month on month after falling -0.1% in July. A strong reading could help lift the US Dollar further.