Indian Rupee to US Dollar (INR/USD) Exchange Rate Steady Before Meeting Minutes
The Indian Rupee opened slightly higher on Tuesday at 59.94 against the US Dollar after the currency experienced its sharpest drop in three weeks on Monday of 29 paise.
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Tuesday has seen a gain for the Indian currency of 23 paise, currently trading against the US Dollar at 59.7800.
WealthRays Securities representative Kiran Kumar stated: ‘Selling of the Dollar by exporters may have been the reason for the appreciation.’
However, the Rupee may experience some volatility against a poised US Dollar which economists believe is set to rally.
Currency expert, Ashutosh Raina stated: ‘Better than expected US jobs data last week stoked the positive sentiment across global markets. Markets are now re-assessing as to when the Fed will start raising the interest rates. The Indian markets are awaiting the first budget from the new government. USD/INR pair has been trading in the 59.50-60.50/Dollar range and should continue to trade in this range till the Budget.’
The US is awaiting results of the meeting minutes this week, in the hope of an optimistic message from the Fed in an attempt to boost the US Dollar.
The US smashed expectations last week with employment data showing an admirable leap.
With more jobs created, pressure was placed on the US Dollar, with economists speculating that the Fed would have to raise interest rates in time with upbeat figures.
Morgan Stanley commented: ‘With (Fed chair Janet) Yellen staying firmly dovish, the minutes may reflect this and has a chance to put the dollar under pressure.’
With economists hypothesising an interest rate hike in the latter half of 2015, last week’s upbeat employment speculation has enabled talk of a rise in the third quarter by Goldman Sachs Group Inc, who initially speculated a rise in the first quarter commencing in 2016. This has led to the assumption that other financial institutions may also change their forecasts.
An expert in the field for KBC Bank NV in Brussels, Piet Lammens, stated: ‘We might see more US banks bringing forward their rate-hike expectations this week. It was an important jobs report. It may be that we get more losses for Treasuries and higher yields today.’
The Rupee however is attempting to attract overseas investors with railway investment which could prove an asset for the Indian currency.
Thursday will see the release of the Balance of Trade for India, whilst Friday will see Industrial Production and Manufacturing Production data released.
This week will see important data days for the US and the Rupee will react in accordance with US Dollar changes; however Tuesday has been a positive day for the Rupee gaining back some of its lost paise from Monday against the US Dollar.
UDPATED July 9, 09:48 am GMT
The Rupee is currently trading at 0.0167 against the US Dollar on Wednesday ahead of India’s Balance of Trade data publishing on Thursday. The trade balance deficit is expected to drop from $-11.5B to $-11.23B.
However current fears of India’s poor monsoon rain weather could cause a problem for crops and furthermore the Indian economy. Therefore India are holding reserves of grains back to trade within the country rather than exporting.
A food ministry representative stated: ‘We don’t want to end up importing grains. We have sufficient grain stockpiles, but naturally there will be an impact because of the weather situation.’
The Rupee may be affected by limited exports over time, however for now the Rupee has gained some stability against the ‘Buck’.