Last week the US Dollar to Indian Rupee (USD/INR) exchange rate fluctuated between lows of 61.7802 and highs of 62.8490.
The pairing closed out the week in a stronger position as demand for emerging-market assets eased following the publication of a considerably better-than-expected US Non-Farm Payrolls report.
As the US added more positions than forecast, the nation’s unemployment rate tumbled from 5.7% to 5.5%. A more modest decline in joblessness to 5.6% had been anticipated.
The report upped the odds of the Federal Reserve increasing borrowing costs in the summer and accordingly gave the ‘Greenback’ a boost.
The US currency posted broad-based gains at the expense of higher-risk assets.
At the beginning of this week, the US Dollar to Indian Rupee (USD/INR) exchange rate began the local session trading in the region of 62.7773, and the US Dollar’s bullish relationship with its Indian peer continued in spite of current account data delivering a positive surprise.
India’s current account report showed that the nation’s deficit narrowed between October and December, easing from 10.1 billion US Dollars in the third quarter to -8.2 billion US Dollars in the fourth quarter.
This was narrower than the shortfall of 8.8 billion US Dollars expected by economists but still almost double the deficit recorded in the same period of the previous year.
Following the report’s publication, the Rupee remained trading around 0.6% lower against the US Dollar. The Pound Sterling to Indian Rupee (GBP/INR) exchange rate, meanwhile, softened slightly as the British Retail Consortium’s Like-for-Like sales report came in below-forecast.
A 0.5% annual sales increase had been expected in February, but a gain of 0.2% was recorded. The data indicates that British consumers are reluctant to spend despite the reduction in CPI.
While improved Federal Reserve interest rate hike expectations are likely to keep the Rupee under pressure, domestic data could also be responsible for fluctuations in the domestic asset in the days ahead.
Tomorrow sees the publication of India’s Trade Balance report. The nation’s trade deficit is believed to have narrowed from -8.32 billion US Dollars to -6.3 billion US Dollars.
This figure is followed by Industrial/Manufacturing Production and Inflation ecostats on Thursday.
A 0.7% year-on-year increase in industrial production has been forecast (down from 1.7% in December) while annual Manufacturing Production is expected to have eased from 2.1% to 0.19%.
The nation’s inflation rate is projected to have edged from 5.11% in January to 5% in February.
Surprising results could inspire Rupee volatility.
Movement in the GBP/INR pairing could also be caused by the UK’s Manufacturing/Industrial Production and Construction Output data, while the direction taken by the USD/INR exchange rate may depend on US Advance Retail Sales, Initial Jobless/Continuing Claims and Confidence figures.
During the European session the Pound Sterling to Indian Rupee exchange rate was trading in the region of 94.6230.
The US Dollar to Indian Rupee (USD/INR) exchange rate was trading in the region of 62.7380.