• Indian Rupee (INR) is easing after 3-days of gains
  • RBI is expected leave rates on hold until July
  • US Dollar (USD) soars
  • US NFP sees huge job creation

The US Dollar Indian Rupee (USD/INR) exchange rate is rising after three days of losses. The pair rose -0.18% in the previous session, settling on Thursday at 82.94. At 10:00 UTC, USD/INR trades +0.09% at 83.02 and trades in a range of 82.82 to 83.24.

The Indian rupee is slipping despite hawkish Reserve Bank of India expectations. The RBI is expected to keep its key interest rate at 6.5% when it meets next week. Economists also expect the central bank to leave rates unchanged till at least July, which is much longer than some other developed market central banks.

The RBI raised its repo rate by 250 basis points, which is less than most of its major peers, and left rates unchanged since February last year as inflation has largely remained in the RBI’s 2% to 6% target range.

With inflation close to the upper band target range, and with its fast-growing economy, a rate cut is looking unlikely anytime soon.

The US Dollar is rising across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades at +0.97% at the time of writing at 103.97, snapping a three-day losing streak.

The US dollar is surging after a stronger-than-expected US nonfarm payroll report, which saw almost double the number of jobs created than economists had forecast.

353,000 jobs were added to the US payroll in January, well above the 180,000 penciled in, and December’s payroll figures were also upwardly revised to 333,000 from 216,000.

The data highlights the impressive resilience of the US job market despite interest rates sitting at a 22-year high of 5.25% to 5.5%.

The data comes after the Federal Reserve interest rate decision on Wednesday, where the central bank left rates unchanged and Federal Reserve chair Jerome Powell as good as ruled out a March interest rate cut.

The market is now fully pricing in an interest rate cut in the May meeting. However, strong data could see these rate cut expectations pushed back further.

Looking ahead, there is no more high-impacting U.S. economic data this week. Attention will turn to next week, where Federal Reserve chair Jerome Powell is set to speak on Sunday evening, and USISM service sector PMI data will be released on Monday.