Indian Rupee to US Dollar (INR/USD) Exchange Rate Strong, GBP/INR Bullish
The US Dollar to Rupee (USD/INR) exchange rate dropped to a 2 ½ week low on Wednesday as the Indian asset was bolstered by the news that the Reserve Bank of India bought up extensive amounts of Dollars in order to prevent the Rupee registering further declines.
The Rupee was also able to rally against the US Dollar as yesterday’s slightly below-forecast US manufacturing reports kept the ‘Greenback’ under pressure ahead of today’s speech from Federal Reserve Chairwoman Janet Yellen.
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Given that US first quarter GDP was recently revised to contraction of 2.9% and the nation has published a stream of lacklustre fundamentals over the past two weeks, it will be interesting to see what tone Yellen adopts when she speaks in Washington this afternoon.
If the Fed chief is particularly dovish and restates the necessity of keeping interest rates at record lows well beyond the conclusion of asset purchase-tapering, the US Dollar could soften further and the Rupee may extend gains.
Additional Rupee support came from Tuesday’s comments from Indian Finance Minister Arun Jaitley and speculation that the Indian Government will outline decisive measures for tackling the headwinds facing the domestic economy.
It is believed that Prime Minister Narendra Modi will detail a range of measures for bolstering economic growth when the Indian budget is presented next week.
In the opinion of currency strategist Hamish Pepper, the budget; ‘Is likely to deliver meaningful policies that support the Rupee and further foreign portfolio inflows. We expect a credible roadmap toward medium-term fiscal consolidation to be announced, important for continued bond purchases by foreign investors and the Rupee support.’
Although the Pound was riding high against the majority of its currency counterparts on Wednesday, it wasn’t able to strengthen against the Rupee and remained 0.25% softer during the European session.
Sterling advanced to a 21-month high against the Euro and a 5 ½ year high against the US Dollar following the publication of unexpectedly upbeat UK house price and construction figures.
Tomorrow’s HSBC Services PMI for India could inspire fluctuations in the US Dollar to Rupee (USD/INR) exchange rate.
It is expected that the measure will push further into growth territory, moving from the 50.2 registered in May to 51.7 in June.
As Wednesday progresses, the US Factory Orders and ADP Employment report could trigger widespread market movement.
The Pound is currently trading against the Indian Rupee in the region of 102.4870.
The US Dollar is currently trading against the Indian Rupee in the region of 59.7200.
Thursday has seen highs for the USD/INR pairing of 59.8000 and lows of 59.5250 as the Rupee asserts its strength over the US Dollar.
Thursday has brought unexpected heights for Indian Services PMI data with an impressive figure of 54.4 published, having jumped from the former 50.2. Although a rise was forecast, economists only predicted a shift to 51.75.
Wednesday saw the Rupee rise 38 paise, creating the biggest jump in a single day in the latter seven weeks. India Forex Advisors CEO Abhishek Goenka stated: ‘Rupee was seen riding on the pre budget optimism after Finance Minister Arun Jaitley’s speech yesterday raised expectations for fiscal consolidation.’
Yes Bank economists have predicted: ‘While oil could provide some near term risk to the rupee, with expected turnaround in the economy, USD/INR is likely to move towards 58 levels by December 2014.’
The US published productive Employment Change data on Wednesday, with figures jumping from 179K to 281K in June, bypassing the forecast 205K.
The US has a data-heavy day Thursday with significant statistics due to be revealed regarding Non-farm Payrolls, Unemployment Rate, and Hourly Earnings which could help to boost the ‘Buck’ amid speculation of interest rate rise time-frames and the Fed’s decisions to attempt to boost the ‘Greenback’.
The Pound is seeing a time of great strength situated amidst positive UK performance data and hot topic speculation regarding interest rate hikes.
The UK produced lower than forecast Composite and Services PMI data on Thursday, yet still remains strong against the bearish US Dollar currently trading at 1.7140.
The Pound’s strength is also enabling it to trade up against the Rupee at 102.4630, having reached highs of 102.5930.