Yesterday the expectation that the Federal Reserve may soon begin reining in its present level of stimulus saw the Rupee slide to an 11 month low against its US counterpart.
The US Dollar Exchange Rate was in the region of 56.5150 against the Indian Rupee as of 11:15 am GMT
However, the likelihood of the Fed slashing easing levels dipped as US manufacturing data failed to live up to expectations, sparking concerns that the US economy isn’t yet stable enough to do without quantitative easing.
The ISM gauge of manufacturing fell from 50.7 in April to 49.0 in May, the lowest level since mid 2009 and taking the sector below the 50 mark separating growth from contraction. Economists had forecast that the index would hold at its previous level.
Consequently the Dollar Index dropped by the most significant amount since January and the Rupee advanced.
As one currency strategist observed: ‘The market sees what it wants to see, clinging on to the idea and hope that weak data may lead to a possible delay of quantitative easing tapering.’
No ‘set exchange rate in mind’ for the Rupee
Meanwhile, Reserve Bank of India Governor Duvvuri Subbarao informed the Press Trust that the central bank has no set exchange rate in mind for the Rupee, although it is believed the Reserve Bank sold Dollars around 56.75 last week to trim the Rupee’s decline.
The Indian currency was also supported by Finance Minister Palaniappan Chidambaram intimating that policy makers will take steps towards restraining an influx of gold imports which have helped produced a record level current-account deficit.
Today’s US trade balance data could cause additional fluctuations in the Dollar/Rupee exchange rate, but investors will largely be looking ahead to Friday’s non-farm payrolls figures. A significant improvement in employment could rekindle prospects for QE tapering before the end of the year and boost the Dollar.
Current Rupee (INR) Exchange Rates
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The Pound Sterling/ Indian Rupee Exchange Rate is currently in the region of: 86.4959 <
The Euro/Indian Rupee Exchange Rate is currently in the region of: 74.1169 >
The US Dollar/Indian Rupee Exchange Rate is currently in the region of: 56.5150 <
The Australian Dollar/Indian Rupee Exchange Rate is currently in the region of: 54.5210 <
The New Zealand Dollar/Indian Rupee Exchange Rate is currently in the region of: 45.4344 <
The Canadian Dollar/Indian Rupee Exchange Rare is currently in the region of: 54.7282 <
(Correct as of 11:15 am GMT)
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