Indian Rupee to US Dollar (INR/USD) Exchange Rate Trending at 8 1/2 Month Low
With demand for higher-risk assets severely diminished by developments in Japan, the Indian Rupee to US Dollar (INR/USD) extended recent declines on Wednesday to trend around a one-month low.
Japan’s Prime Minister announced that a planned sales tax increase would be suspended and called a snap election in response to the news that the world’s third largest economy entered recession in the third quarter of the year.
These actions drove investors towards safer assets like the US Dollar and saw currencies like the Rupee fall.
Given that ecostats for India are in short supply this week, further INR/USD movement is likely to be occasioned by the publication of minutes from the latest Federal Open Market Committee (FOMC) policy meeting.
As the Fed opted to conclude its quantitative easing programme at its recent gathering, the minutes could be comparatively hawkish in tone.
In the view of industry expert Arthur Burns; ‘If they are going to be consistent, they should be hawkish minutes, but I don’t think they’re going to be. I think that may be part of the reason we’ve really had subdued activity yesterday and today. It was such a shock last time we had these minutes that people are a little on-edge.’
The US Dollar to Indian Rupee (USD/INR) exchange rate hit a low of 61.6500
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The Indian Rupee to US Dollar (INR/USD) exchange rate extended declines as trading progressed, falling to its lowest level since March.
According to currency analyst Anindya; ‘Exports remain a worry for India, plus the Rupee can’t completely decouple from what’s happening in the international markets. The overall trend for the rupee for a month or so is going to be that of slow depreciation.’
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The Rupee went on to extend declines and ended up slumping to an over eight-month low against the US Dollar.
Currency analyst Anish Vyas asserted; ‘The Dollar demand from oil companies should continue at least until the end of the month. However, hopes of rate cuts and positive reforms from the government should limit any major fall in the Rupee.’
The US Dollar to Indian Rupee (USD/INR) exchange rate was trending in the region of 61.9500
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The Indian Rupee went on to hit a nine-month low. According to NDTV, there are several reasons for the US Dollar’s decline, including broad US Dollar strength, concerns over the economic slowdown and reduced Dollar flows.
NDTV also stated; ‘Among domestic reasons, the immediate trigger seems to be the buying of Dollars by state-owned banks […] Banks have accelerated their ‘Greenback ‘purchases to make the most of falling crude prices, which are hovering around four-year lows.’
Pound Sterling to Euro (GBP/EUR) Exchange Rate Recovers Losses on BoE Minutes
On Tuesday the Pound Sterling to Euro (GBP/EUR) exchange rate fell below the 1.25 level on UK disinflation concerns.
However, the Pound was able to recoup some of its recent losses against its European counterpart following the publication of minutes from the latest Bank of England (BoE) policy meeting.
Before the minutes were published strategist John Wraith observed; ‘We might have more dovish minutes than last month. Recent comments by most policy makers suggested there is no case to push interest rates higher any time soon. It will be interesting to see if Weale or McCafferty rejoined the majority. Yields are likely to stay low.’
However, the minutes showed that the two members of the Monetary Policy Committee mentioned above voted for an immediate interest rate increase.
The minutes also asserted that the MPC is divided on the ‘balance of risks’ to the UK outlook.
These signs of dissent were enough to help the Pound gain on several of its currency counterparts.
Meanwhile, the Euro received some modest support from data showing a widening in the Eurozone’s Current Account surplus.
The GBP/EUR exchange rate was trending in the region of 1.2485
Swiss Franc to Pound Sterling (CHF/GBP) Exchange Rate Weaker as Euro Cap Discussed
The Swiss Franc to Pound Sterling (CHF/GBP) exchange rate declined on Friday as the Swiss National Bank asserted that it will take action to protect its 1.20 cap against the Euro.
Disappointing fundamentals from the Eurozone and the threat of further stimulus from the European Central Bank pushed the CHF/EUR exchange rate to a 26-month high, but the SNB is prepared to take defensive measures to ensure its cap on the pairing remains in place.
According to Governing Board Member Fritz Zurbruegg; ‘The SNB will continue to enforce the minimum exchange rate with the utmost determination. To this end, it is prepared to purchase foreign exchange in unlimited quantities and to take further measures immediately if required […] For us negative rates are a complementary measure.’
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The Swiss Franc to Pound Sterling (CHF/GBP) exchange rate weakened modestly on Wednesday as the Bank of England’s (BoE) meeting minutes showed continued division among policymakers on the subject of interest rate increases.
Further CHF/GBP fluctuations could take place later in the European session as Switzerland releases its ZEW Economic Expectations Survey. The measure of sentiment came in at -30.7 in October so investors will be hoping for a more upbeat result this time out.
The Swiss Franc to US Dollar (CHF/USD) exchange rate drifted higher ahead of the publication of minutes from the latest Federal Open Market Committee (FOMC) meeting.
The Franc had previously risen against the US Dollar ahead of the highly-anticipated Swiss Gold Referendum.
The Swiss Franc to Pound Sterling (CHF/GBP) exchange rate was trending in the region of 1.5002
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The Swiss Franc later recouped losses as the ZEW Economic Expectations Survey jumped from -30.7 to -7.6 in November.
According to ZEW; ‘The indicator’s rise in November is likely associated to moderately improved economic data from Germany: The increase in the Purchasing Manager Index for Germany mitigates concerns that the Swiss economy might be affected by an economic slowdown in Germany. It is furthermore possible that analysts’ sentiment generally improved due to the rebound in global stock prices since mid-October.’
