US Dollar to Indian Rupee Exchange Rate News ? India?s Services, Current Account Data Ahead

During the local session the Rupee edged slightly lower against the US Dollar. The ‘Greenback’ managed to display remarkable resilience on Monday as the US ISM Manufacturing index fell by more than expected. While the less-than-impressive US ecostat would normally have weighed on demand for the US Dollar, the belief that the measure for March will show a rebound prevented the currency sliding. On Tuesday the US Dollar to Indian Rupee currency pair was trading in the region of 61.9350, little changed on the day’s opening levels. The Pound to Indian Rupee exchange rate recorded a modest gain following the release of better-than-anticipated UK construction figures and was achieving 95.1330.

The US Dollar to Indian Rupee currency pair is likely to experience volatility tomorrow following the publication of India’s Current Account data for the fourth quarter (which is expected to show a widening in the nation’s deficit) and the HSBC Services Purchasing Managers Index. Economists have predicted that the measure eased from 52.4 in January to 52.07 in February, moving slightly closer to the 50 mark separating growth from contraction. The last Indian services report prompted this response from HSBC economist Pranjul Bhandari; ‘The January Services PMI was marked by faster expansions in activity and new orders. The weakest sectoral performance in this otherwise encouraging data was from financial services. Business sentiment led by anticipated improvements in demand and new commercial initiatives, rose to a seven-month high. On the inflation front, both input and output prices rose further, though at a modest pace when compared to historical trends. We expect RBI to cut rates by a total of 75bp in 2015, but no further as latent inflation pressures could pick up when growth sees a meaningful lift.’

Tomorrow’s US reports, including ADP Employment Change, ISM Non Manufacturing PMI and the Fed’s beige book could all inspire USD/INR exchange rate movement. Before the weekend, India’s Deposit Growth, Bank Loan Growth and Foreign Reserves figures could all cause some slight shifts in the Rupee. However, investors will be far more interested in the US Non-Farm Payrolls report. If the data shows the increase in positions and the decline in joblessness expected, it could bring forward US Federal Reserve interest rate hike expectations and reduced demand for emerging market currencies like the Rupee.