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US Dollar to Indian Rupee Exchange Rate Trended Lower on Bullish Risk Appetite
Published: 26 May at 4 PM Tags: Euro Exchange Rate, Dollar Exchange Rate, Currency Exchange, Rupee Exchange Rate, Euro Crisis, UK, Exchange Rates, Economy,
With US data proving mixed the US Dollar to Indian Rupee (USD/INR) exchange rate extended its downtrend on Thursday, driven lower by a decline in safe-haven demand.
Diminishing Odds of Fed Rate Hike Weighed on US Dollar
While members of the Federal Open Market Committee (FOMC) have continued to express a hawkish outlook on monetary policy in recent days markets have remained somewhat sceptical of the chances of a June rate hike.
The odds of such a move were dented on Wednesday by weaker-than-expected US Services and Composite PMIs, which suggested that the domestic economy was experiencing greater slowdown pressure than previously thought.
As a result the US Dollar (USD) entered a downtrend against many of the majors, with an increase in market risk appetite keeping investors from buying back into the softening currency.
Demand for the ‘Greenback’ did not pick up on Thursday afternoon, in spite of the latest Durable Goods Orders figure strongly bettering forecast at 3.4% rather than 0.5%.
Risk Appetite Shored up Indian Rupee Demand
The appeal of emerging-market currencies such as the Indian Rupee (INR), meanwhile, was boosted by a resurgence in the price of oil.
Brent crude climbed back above the $50 per barrel mark for the first time since November 2015 in the wake of a larger-than-expected decrease in US stockpiles, prompting investors to adopt a more bullish outlook.
Reduced bets of imminent monetary policy action from the Fed also supported the Rupee, as a slower pace of Fed tightening limits pressure on the Reserve Bank of Indian (RBI) to adopt a more responsive, dovish outlook.
Consequently the US Dollar to Indian Rupee (USD/INR) exchange rate was trending lower in the region of 67.0640 towards the close of Thursday’s European session.
Yellen Dovishness Predicted to Weaken USD/INR Exchange Rate
Further ‘Greenback’ volatility is expected on Friday, with the first quarter US GDP report and commentary from Fed Chair Janet Yellen in focus.
Forecasts suggest that annualised growth in the US rose from 0.5% to 0.9% at the start of the year, an encouraging signal that could reignite speculation over an imminent rate hike.
However, the USD/INR exchange rate may weaken further if Yellen adopts a more dovish view than that expressed by her colleagues in recent days, an eventuality that seems likely given previous appearances from the Fed Chair.
Should wider market sentiment also continue to favour higher-risk assets the Rupee could hold onto its gains ahead of the weekend, in spite of a lack of more impactful Indian data.
Diminishing Odds of Fed Rate Hike Weighed on US Dollar
While members of the Federal Open Market Committee (FOMC) have continued to express a hawkish outlook on monetary policy in recent days markets have remained somewhat sceptical of the chances of a June rate hike.
The odds of such a move were dented on Wednesday by weaker-than-expected US Services and Composite PMIs, which suggested that the domestic economy was experiencing greater slowdown pressure than previously thought.
As a result the US Dollar (USD) entered a downtrend against many of the majors, with an increase in market risk appetite keeping investors from buying back into the softening currency.
Demand for the ‘Greenback’ did not pick up on Thursday afternoon, in spite of the latest Durable Goods Orders figure strongly bettering forecast at 3.4% rather than 0.5%.
Risk Appetite Shored up Indian Rupee Demand
The appeal of emerging-market currencies such as the Indian Rupee (INR), meanwhile, was boosted by a resurgence in the price of oil.
Brent crude climbed back above the $50 per barrel mark for the first time since November 2015 in the wake of a larger-than-expected decrease in US stockpiles, prompting investors to adopt a more bullish outlook.
Reduced bets of imminent monetary policy action from the Fed also supported the Rupee, as a slower pace of Fed tightening limits pressure on the Reserve Bank of Indian (RBI) to adopt a more responsive, dovish outlook.
Consequently the US Dollar to Indian Rupee (USD/INR) exchange rate was trending lower in the region of 67.0640 towards the close of Thursday’s European session.
Yellen Dovishness Predicted to Weaken USD/INR Exchange Rate
Further ‘Greenback’ volatility is expected on Friday, with the first quarter US GDP report and commentary from Fed Chair Janet Yellen in focus.
Forecasts suggest that annualised growth in the US rose from 0.5% to 0.9% at the start of the year, an encouraging signal that could reignite speculation over an imminent rate hike.
However, the USD/INR exchange rate may weaken further if Yellen adopts a more dovish view than that expressed by her colleagues in recent days, an eventuality that seems likely given previous appearances from the Fed Chair.
Should wider market sentiment also continue to favour higher-risk assets the Rupee could hold onto its gains ahead of the weekend, in spite of a lack of more impactful Indian data.
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Source: moneytransfer.co.uk