US Dollar to Indian Rupee Trends in Narrow Range before Confidence Data

End of month US Dollar selling among local businesses saw the USD/INR exchange rate gain on Monday. The ‘Greenback’ was also able to advance on its Indian counterpart thanks to better-than-expected US Personal Consumption Expenditure and Pending Home Sales figures. Economists had forecast that core PCE would advance by 1.4% on the year in February rather than the 1.3% expected. Meanwhile, pending home sales in the nation rose by 3.1% on the month in February, a far stronger increase than the 0.4% gain expected. The Dallas Fed Manufacturing Activity measure was less impressive however, printing at -17.4 rather than the -8.8 expected.

The US Dollar was also maintaining a bullish relationship with the majority of its currency counterparts as a result of Friday’s rate-related comments from Federal Reserve Chairwoman Janet Yellen. The Fed chief might not have shed any new light on the subject of borrowing costs or their projected path, but she did assure investors that the Federal Open Market Committee is primed for borrowing costs being increased this year. As some investors had been concerned that inflationary worries would prevent interest rates being raised, her remarks were US Dollar supportive. Yellen stated; ‘I have argued that a pickup in neither wage nor price inflation is indispensable for me to achieve reasonable confidence that inflation will move back to 2 percent over time. That said, I would be uncomfortable raising the federal funds rate if readings on wage growth, core consumer prices, and other indicators of underlying inflation pressures were to weaken, if market-based measures of inflation compensation were to fall appreciably further, or if survey-based measures were to begin to decline noticeably.’

However, the US Dollar to Indian Rupee currency pair was trading in a narrow range prior to the publication of the US Consumer Confidence data. Fresh Dollar selling by exporters helped the Rupee hold its own against the ‘Greenback’ and the USD/INR exchange rate was trading in the region of 62.5480 – unchanged from the day’s opening levels. In the hours ahead, the USD/INR pair could experience volatility if the US Consumer Confidence index unexpectedly rises or falls. As it stands, investors are expecting it to remain on hold at 94.6. Investors with an interest in USD/INR will also be focusing on India’s Infrastructure Output and Government Budget Value figures. Tomorrow’s Indian HSBC Manufacturing PMI for March could be a major source of Rupee movement.