- Indian Rupee (INR) falls after gains yesterday
- Oil prices rise to a 4.5-month high
- US Dollar (USD) rises versus major peers on safe-haven flows
- The Fed left rates unchanged at 4.25% – 4.5%
The US dollar-to-Indian rupee (USD/INR) exchange rate is rising for a third day. The pair rose 0.13% in the previous session, settling on Wednesday at 86.43. At 21:30 UTC, USD/INR traded 0.47% higher at 86.84 and traded in a range of 86.88 to 86.41.
Indian rupee is falling, dropping to its lowest level in three months on Thursday as risk sentiment deteriorated across financial markets amid concerns over the Israel-Iran conflict, and potential US involvement.
Oil prices with WTI back near $75 a barrel after Israel hit a key Iranian nuclear site, and as President Trump keeps the world guessing over whether the US would join Israel’s attacks on Iranian nuclear sites.
Should oil supplies come under direct threat, the oil price could surge, which is bad news for India, which imports over 80% of its domestic oil needs.
The US Dollar is rising across the board. The US Dollar Index, which measures the greenback against a basket of major currencies, is rising 0.04% to 98.91 after giving up most of its earlier gains.
The US dollar is pushing higher despite the Juneteenth public holiday in the US, with US equity markets closed.
The US dollar is rising on safe-haven flows, fueled by concerns over whether the US will join the conflict in the Middle East.
The US dollar is also grinding higher after yesterday’s Federal Reserve interest rate decision, which saw the US central bank leave interest rates unchanged at 4.25 to 4.5%. However, Federal Reserve chair Jerome Powell warned about inflation, which he sees rising meaningfully due to Trump’s tariffs.
The Fed updated its projections downward, revising growth forecasts to 1.4% this year and upward, revising inflation expectations to 3% this year.
The Federal Reserve’s medium dot plot still pointed to 225 basis point rate cuts this year. However, 7 policymakers, up from 4 in March, believe that the Fed will not cut interest rates at all this year.
