USD/INR seems to extend gains on Wednesday amid US-Iran war
The USD/INR pair ended Monday’s session 0.7% higher to near 92.00. The pair is expected to open higher on Wednesday, with Indian markets remaining closed on Tuesday due to Holi celebrations, as the US Dollar (USD) extends its gains.
During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.4% higher to near 99.00, the highest level seen in almost seven weeks.
The US Dollar is surging as its safe-haven demand has increased significantly amid the escalating war between the United States (US), Iran, and Israel.
In retaliation for the killing of Iran’s Supreme Leader, Ayatollah Ali Khamenei, Tehran’s top national security official, Ali Larijani, has vowed to avenge and has rejected the idea of negotiating with the US. As part of retaliation, Tehran has closed the Strait of Hormuz, a sea route from which 20% of global crude oil is shipped, and launched a series of drone attacks on the US Embassy in Riyadh.
On the domestic front, easing dovish Federal Reserve (Fed) expectations for the June policy meeting have also offered some strength to the US Dollar. The CME FedWatch tool shows that the probability of the Fed holding interest rates steady in the June policy meeting has increased to 53.5% from 42.7% seen on Friday.
Fed dovish prospects have receded after the release of the ISM Manufacturing PMI data on Monday, which signaled a sharp increase in factory-level inflation. The report showed that the sub-component Prices Paid – which tracks changes in prices paid for inputs such as labor and raw materials – soared to 70.5 against estimates of 59.5 and the previous reading of 59.0.
Rising oil prices due to the Middle East war are expected to weigh on the Indian Rupee (INR), given that the Indian economy relies heavily on imports of oil to meet its energy needs.
Meanwhile, the outflow of foreign funds from the Indian stock market on the first trading day of March is expected to elevate to burden the Indian Rupee. The data showed on Monday that Foreign Institutional Investors (FIIs) offloaded their stake worth Rs. 3,295.64 crore, according to NSE.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
$1,999 Foldable iPhone Is Ready, but Apple (AAPL.US) Faces Over $5.7 Billion Patent Penalty
As Apple intensifies its efforts in foldable displays and AI business, it faces a haptic technology patent compensation ruling exceeding $5.7 billion. On September 25, a federal jury in California found that Apple's Taptic Engine, used in certain iPhone and Apple Watch models, infringed on two patents held by Taction Technology.
Prospects for the opening of the Hormuz Strait are overshadowed, Asian bonds under pressure: 2Y Japanese bond yield approaches 2%, 3Y Korean bond yield rises to highest level since 2022
With high oil prices, short-term bond yields in South Korea and Japan have risen.
5% US Treasury pressure weighs on global assets, while Australian government bonds open up a window for allocation? Fixed income giant Pimco calls the rate hike expectations too aggressive
Pacific Investment Management Company (Pimco) holds a constructive view on Australian bonds, believing that market expectations for rate hikes are too high. Pimco stated that the rate hike cycle in Australia has been "fully priced in," and cracks are beginning to appear in the economy, making Australian bonds look attractive, especially in the 5- to 10-year segment of the yield curve.
Only a few stocks are rising! Goldman Sachs warns: US stock market breadth hits the worst level since the 2000 internet bubble, with rare divergence in bond volatility
Flood, a Goldman Sachs partner, believes that leading AI companies are propping up the market indexes, while median stocks have fallen 16% from their highs. More unusually, Garrett, the head of derivatives trading at Goldman Sachs, warns that the bond volatility MOVE index is at an extremely high percentile, yet the VIX remains subdued. Jonathan Krinsky, a strategist at BTIG, points out that while total hedge fund leverage is rising, net leverage is falling, indicating a contradiction of "increasing exposure without increasing direction," and warns: "Something has to give."
Crypto prices
More
