Indian Rupee to US Dollar (INR/USD) Exchange Rate Recovers from 9-Month Low
The Indian Rupee to US Dollar (INR/USD) exchange rate advanced on Tuesday as the Reserve Bank of India (RBI) left interest rates on hold.
While falling inflationary levels have led to some investors betting that the RBI will adjust fiscal policy in the foreseeable future, the central bank left borrowing costs at 8%. They did hint, however, that alterations may be made in the first part of next year.
The decision and accompanying statement saw economist Vishnu Varathan comment; ‘The RBI is clearly alluding to them having enough scope to ease. Governor Rajan has done an admirable job of putting to sleep most of the speculation that he may bend to pressure but, at the same time, he has been very objective about what the balance of risk is.’
On Wednesday India’s HSBC Services index gave the Indian Rupee to US Dollar exchange rate a further boost. The measure came in at 52.6 instead of the 51.1 forecast. This was above the reading of 50.0 recorded in October.
The US Dollar to Indian Rupee (USD/INR) exchange rate hit a low of 61.8500 before rebounding to 61.9100 following the release of US Construction Spending data. Construction Spending surged by considerably more than anticipated in October, giving the US Dollar support.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Little-Changed before Services PMI
The Pound Sterling to Euro (GBP/EUR) exchange rate fluctuated within a narrow range on Tuesday as the UK’s Construction PMI came in below forecast levels.
The slightly disappointing reading wiped out the positive impact from yesterday’s above-forecast manufacturing report and saw the Pound slide against peers like the US Dollar.
Declines against the Euro were limited as the Eurozone’s Producer Price Index posted a sharper declination than expected.
Notable GBP/EUR volatility can be expected tomorrow when the UK publishes its services and composite PMI’s and the Eurozone’s retail sales figures are released.
The GBP/EUR exchange rate reached a high of 1.2639 and briefly slid below the 1.26 level to 1.2588 over the course of the European session.
The GBP/EUR exchange rate was trending in the region of 1.2619.
US Dollar to Pound Sterling (USD/GBP) Exchange Rate Stronger on Fischer’s Comments
The US Dollar to Pound Sterling (USD/GBP) exchange rate surged by 0.5% as the US published better-than-expected Construction Spending data and Federal Reserve official Stanley Fischer hinted that there will soon by an alteration to the Fed’s stance on interest rates.
Fischer asserted; ‘You saw in the minutes of the last meeting there was some discussion of [getting rid of the ‘considerable time’ phrase], and it’s clear we are closer to getting rid of that than we were a few months ago. It wouldn’t be appropriate for me to give you a guess as to what my colleagues and I are going to do at the next meeting. You may assume we’re not going to suddenly stop that and not say anything, just take it out and leave no guidance on how long interest rates will [remain on hold] We don’t want to surprise markets. On the other hand, we can’t give precise estimates about dates that we don’t know, and that’s why the emphasis always goes back to the data, and not to the date.’
The US Construction Spending report showed a month-on-month increase of 1.1% in October, almost double to rise of 0.6% expected by economists. The previous month’s decline was revised to -0.1%.
While tomorrow’s UK Services PMI is likely to have an impact on the USD/GBP pairing, economists will also be focusing on the ADP Employment Change report, US Markit Services PMI and ISM Non-Manufacturing Composite figures.
The US Dollar to Pound Sterling (USD/GBP) exchange rate was trading in the region of 0.6386
