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US Dollar to Indian Rupee (USD/INR) Exchange Rate Trends in Narrow Range before NFP Report

April 2, 2015 - Written by John Cameron

The US Dollar to Indian Rupee (USD/INR) exchange rate was trending in a narrow range on Thursday as positive US reports failed to give the ‘Greenback’ much of a boost ahead of the release of the highly-influential US Non-Farm Payrolls report. The USD/INR pairing was trading in the region of 62.1120, having moved between highs of 62.3200 and lows of 62.0700.

The Rupee recently recorded its first quarterly gain against the US Dollar for 12 months as an improving domestic outlook attracted inflows. However, some Indian policymakers are concerned about the strength of the emerging-market asset, and a contingent are predicting that the Reserve Bank of India will introduce an interest rate cut to counter the issue. The stronger Rupee is currently preventing the government’s attempts to get manufacturing on an even keel by damaging India’s merchandise exports. A senior government official was quoted as saying; ‘Inflows have been very strong... We could be in for a shock if corrective steps are not taken soon.’

Given that the US Dollar has been adopting a bullish relationship with a number of its most-traded currency rivals amid bets the Federal Reserve will increase interest rates this summer, the emerging-market asset’s resilience has been remarkable. The Rupee also benefited from the below forecast US ISM Manufacturing and ADP Employment Change figures published on Wednesday. During Thursday’s North American session the USD/INR pairing was little changed following the publication of the US initial jobless/continuing claims numbers and the US Factory Orders report. The number of people applying for first time unemployment benefits in the US was shown to have fallen by more-than-anticipated in the week ending March 28. The level of continuing claims also softened. Meanwhile, Factory Orders surprised investors by registering a 0.2% increase in February, up from a negatively revised decline of -0.7% in January.

A reading of -0.4% had been projected. Reuters News Agency said of the result; ‘The [Commerce Department] also said orders for non-defence capital goods excluding aircraft - seen as a measure of business confidence and spending plans – declined 1.1 percent instead of the 1.4 percent drop reported last month. Manufacturing has been hit by a strong Dollar and lower crude oil prices, which are putting a squeeze on the profits of multinational corporations and oil firms. Some energy firms are either delaying or cutting back on capital expenditure.’ US Dollar movement was limited ahead of tomorrow’s NFP stats. Economists have projected that the US added 245,000 positions in March, which would result in the nation’s unemployment rate holding at 5.5%. However, if the figure exceeds predictions and the unemployment rate falls, the ‘Greenback’ could well rally before the close of the week and advance on peers like the Rupee.

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