Dollar was weighed down against its major crosses after US announced it would impose 10% tariffs on European-made Airbus planes and 25% duties on French wine, Scotch and Irish whiskies, and cheese from across the continent as punishment for illegal EU aircraft subsidies. Payrolls number released from the US too was disappointing thereby keeping gains restricted for the dollar. Data showed the US economy added 136,000 jobs in September compared to 168,000 jobs added in the previous month. Euro and Pound did witness some uptick but the latter continues to remain more under pressure as Brexit related uncertainty is keeping gains capped for the currency.
Performance of Indian Rupee and factors that came into play
Rupee was weighed down at the start of the week but gained in the latter half ahead of the important RBI policy statement that was released on Friday. In line with expectation the RBI decided to cut rates by 25bps and maintain its “accommodative” policy stance “as long as it is necessary” to revive growth. The central bank also trimmed its GDP forecast for 2019-20 from 6.9% estimated earlier to 6.1%. India’ cumulative rates cut for the year totals 135bps making one of the most aggressive central bank in Asia.
Expected performance and events in the week ahead which can influence the performance of Indian Rupee
Rupee is expected to consolidate in a wide range of 70.50 and 71.20(Spot) as reaction of the rate cut by the RBI was quite muted. On the domestic front, market participants will be keeping an eye on the industrial production number and weaker-than-expected growth could keep the rupee weighed down against the US dollar. On the global front, rupee will be getting cues from the FOMC meeting minutes and inflation number that will be released from the US.
By- Gaurang Somaiya, Forex & Bullion analyst, Motilal Oswal Financial Services Private Ltd.