At the beginning of the week the Indian Rupee closed out the local session trading in the region of a 4-week low against the US Dollar.
On Friday the Rupee strengthened to 61.70 against its US counterpart despite the US Non-Farm Payrolls report printing well above forecast levels, upping Federal Reserve interest rate hike bets and inspiring a surge in demand for the ‘Greenback’.
While the US economy had been expected to add 230,000 positions in January, NFP actually increased by 257,000 on the month following a positively revised gain of 320,000 positions in December.
Although the US unemployment rate edged up to 5.7% from 5.6%, this was largely due to the nation’s participation rate rising to 62.9%.
Domestic wage data also impressed, with the nation’s hourly earnings increasing by 2.2% on the year in January rather than the 1.9% expected.
The Federal Reserve has repeatedly stressed that any moderation in borrowing costs will be dependent on the continued strong performance of the US labour market, so these figures support the case in favour of an interest rate hike occurring in the first half of 2015.
This report also made up for the mixed bag of US data published earlier in the week.
The USD/INR currency pair had spent the previous four sessions moving between lows of 61.56 and highs of 62.20.
On Monday Dollar demand from importers and banks kept the Rupee trading bearishly against the ‘Greenback’.
The appeal of the Rupee wasn’t improved by India’s fourth quarter growth report, despite the fact that the pace of expansion proved to be faster-than-anticipated.
India’s Gross Domestic Product came in at 7.5% in the fourth quarter of 2014 year-on-year, down from revised growth of 8.2% in the third quarter but beating forecasts for a figure of 5.75%.
The report led to revised growth projections from India’s Statistics Ministry, who now envisage the nation’s economy expanding by 7.4% over the fiscal year.
As the Statistics Ministry recently upwardly revised its growth projections for the previous fiscal year from 4.7% to 6.9%, some industry experts are questioning the validity of this unexpected surge in growth.
On Tuesday, the Indian Rupee to US Dollar (INR/USD) exchange rate could experience volatility following the publication of India’s trade balance data for January. Economists have predicted that the nation’s trade deficit widened from -9.43 billion US Dollars to -13.6 billion US Dollars. If this estimation proves accurate it could reduce demand for the Rupee and the USD/INR pairing could extend gains.
The US Wholesale Inventories report could also have an impact on trading, although investors with an interest in the US Dollar are likely to be looking ahead to the week’s major North American report – the nation’s Advance Retail Sales number, due for release on Thursday. As sales are believed to have fallen on the month, the Rupee could post gains.
Other Indian data to be aware of this week include the nation’s industrial production, manufacturing production and inflation rate reports.
Positive Indian data could lend the Rupee some support.
The US Dollar to Indian Rupee (USD/INR) exchange rate spent Monday moving between highs of 62.2100 and lows of 61.9400 before closing out the local session trading in the region of 62.1091.
Other Indian data to be aware of this week include the nation’s industrial production, manufacturing production and inflation rate reports.
Positive Indian data could lend the Rupee some support.
The US Dollar to Indian Rupee (USD/INR) exchange rate spent Monday moving between highs of 62.2100 and lows of 61.9400 before closing out the local session trading in the region of 62.1091.