Although US Housing Starts/Building permits reports fell short of forecasts, the Indian Rupee continued to trend in the region of a 13-month low against the US Dollar.
US Dollar to Indian Rupee Exchange Rate Holds Advances
Housing starts fell by -1.6% on the month while building permits slumped by 5.2%.
The US Dollar to Indian Rupee (USD/INR) exchange rate was also little changed following the release of a below forecast US Markit Manufacturing PMI.
While a reading of 55.5 had been expected in December, the index actually slipped to 53.7.
Earlier… The US Dollar to Indian Rupee (USD/INR) exchange rate was trading in the region of a 13-month high prior to the release of the US Markit Manufacturing PMI.
USD/INR Exchange Rate Slides to 63.4950
With poor Chinese data sparking a risk-off environment, demand for assets like the Rupee fell and the US Dollar to Indian Rupee (USD/INR) exchange rate moved beyond a one-year low.
The manufacturing gauge fell from 50 to 49.5. A reading of 49.8 had been anticipated.
With the index now residing below the 50 mark separating growth from contraction, economists are betting that the People’s Bank of China will have to introduce additional stimulus measures in order to shore up the Chinese economy.
Economist Hongbin Qu said of the result; ‘The HSBC China manufacturing PMI dropped to a seven-month low of 49.5 in the flash reading for December, down from 50.0 in November. Domestic demand slowed considerably and fell below 50 for the first time since April 2014. Price indices also fell sharply.’
‘The manufacturing slowdown continues in December and points to a weak ending for 2014. The rising disinflationary pressures, which fundamentally reflect weak demand, warrant further monetary easing in the coming months.’
The data pulled higher-risk currencies lower and the Indian Rupee fell against the US Dollar, Pound and Euro.
The appeal of the Rupee was also undermined by a strong US Dollar and the Bank of Russia’s decision to increase interest rates to counter the impact of a weak domestic currency and a drop in oil prices.
Concerns regarding India’s widening trade deficit also took a toll. In the opinion of forex expert Ashtosh Raina; ‘All of the factors that are in play – global growth concerns, the Russian crisis and the slowdown in China – are negative for emerging-market currencies.’
USD/INR Exchange Rate Forecast
With economic reports for India in short supply over the rest of the week, further movement in the US Dollar to Indian Rupee (USD/INR) exchange rate will occur as a result of releases from the US.
Today volatility in the pairing could be caused by the US Building Permits/Housing Starts figures and the Markit US Manufacturing PMI.
The gauge of the US manufacturing sector is expected to have increased from 54.8 to 55.5 in December. If that proves to be the case, it would give the US Dollar a boost.
Industry experts will also be looking ahead to the upcoming Federal Open Market Committee policy meeting and accompanying statement.
Hawkishness from the central bank or hints regarding the increasing of interest rates could inspire a US Dollar surge.
Indian Rupee Exchange Rates
The US Dollar to Indian Rupee (USD/INR) exchange rate is currently trending in the region of 63.4100.
The Pound Sterling to Indian Rupee (GBP/INR) exchange rate is currently trending in the region of 99.5060.