The US dollar is down against the Indian rupee on Wednesday as US President Trump concludes his trip to India with no bad news on tariffs. Disappointing US economic data has weighed on the dollar but its appeal as a haven during the coronavirus outbreak is putting a floor under it.
USD/INR was lower by 25 pips (-0.35%) to 71.60 with a daily range of 71.57 to 71.86 as of 10am GMT. A failure to break above 72 has seen the currency pair dip back to 5-day lows above 71.5. For the week the exchange rate is lower by -0.35%.
The INR benefits from low crude oil price
Some relief may be playing into the Indian rupee as US President Trump departs India with no positive or negative major announcements on security or trade. This was expected but the lack of surprise was probably a net-positive for the rupee. Trump did refer to Prime Minister Modi’s “tough” stance on trade and said the issues were unlikely to be resolved anytime soon. However markets have reached the conclusion that a US-India trade war is not around the corner, at worst it is probably delayed until after the November US election.
Another downturn in oil prices that has taken the price of US benchmark crude oil contract West Texas Intermediary (WTI) below $50 per barrel is a positive for the rupee. Rising concern about the economic impact of the COVID-19 coronavirus continues to weigh on the demand outlook for oil. India stands to benefit from the lower prices as a net-oil importer. Energy markets are struggling to find a base with OPEC Nations and non-OPEC nations particularly Russia as yet undecided on whether to slash production to help stabilise the demand-supply imbalance.
The USD slows down due to lower than expected US consumption
US consumer confidence rose in February albeit at a slower pace than expected. The conference board’s Consumer Confidence Index rose to 130.7 from 130.4 but less than the 132 expected. The lowered expectations for US consumption saw the yield on 10-year Treasuries fall to a record low, making the dollar relatively less attractive to the rupee on the basis or interest earned.