The Indian Rupee spent Monday’s session trading in a slightly softer position against peers like the Pound and US Dollar.
Last week the US Dollar to Indian Rupee (USD/INR) exchange rate fluctuated between highs of 62.32 and lows of 61.30 as mildly dovish comments from Federal Reserve Chairwoman Janet Yellen and surprising US reports (including an unexpected surge in Durable Goods Orders) affected demand for the world’s most traded currency.
After the People’s Bank of China (PBOC) issued an interest rate cut in order to support domestic growth, demand for the US Dollar increased and higher-risk currencies like the Rupee accordingly declined.
Improved demand for the ‘Greenback’ from local banks also contributed to the Rupee’s modest downtrend and the emerging-market asset closed out the local session in the region of 61.87 against the US Dollar.
The Indian Rupee registered a modest decline against the British Pound in spite of the UK releasing a mixed bag of economic reports.
Nationwide House Price data showed the slowest pace of price growth for 17-months, and mortgage approvals failed to gain by as much as expected.
However, the UK’s Markit Manufacturing PMI moved further into growth territory, advancing to 54.1 in February from a positively revised 53.1 in January. If the nation’s Services and Construction PMI’s also impress, the Pound is likely to resume its recent uptrend.
India also published its HSBC Manufacturing PMI today. The index of India’s manufacturing sector fell from 52.9 to 51.2 in February, moving closer to the 50 mark separating growth from contraction. Economists had expected a reading of 52.6.
Markit economist Pollyanna De Lima said of the result; ‘Manufacturing growth in India lost momentum in February, with output and new orders expanding at softer rates than those seen in the past four months. Additionally, the moderation in the growth rate was evident across the three monitored market groups. Subsequently, employment decreased, reversing the marginal rise seen in January.’
As the week progresses, further Rupee movement could be caused by tomorrow’s Indian Current Account data and Wednesday’s HSBC Services PMI for February. The measure is expected to decline from 52.4 to 52.07.
Of course, global economic developments, commodity price shifts and US reports will also have an impact on Indian Rupee trading.
The week’s most influential US report is Non-Farm Payrolls, due out on Friday. A sturdy employment gain could prompt the Federal Reserve to bring forward its interest rate hike projections, so if the nation’s unemployment rate does fall to 5.6%, as forecast, the US Dollar may climb and higher-risk assets (like the Rupee) will come under pressure.