USD/INR Rebounds As Dollar Strengthens, Fed Takes Hawkish Stance

The Indian rupee (INR) lost momentum on Wednesday amid dollar demand from importers and bets that the U.S. Federal Reserve (Fed) will not cut interest rates imminently. Nonetheless, positive signals from local equities and an upbeat outlook for the Indian economy are likely to boost the Indian rupee and limit the pair’s upside in the near term. Business activity in India continued to strengthen in April and expanded at the fastest pace in nearly 14 years on strong demand, a survey showed on Tuesday. Reports show that India is expected to become the fastest-growing major economy this year after impressive growth in recent quarters.

U.S. durable goods orders for March will be released on Wednesday. Later this week, market participants will focus on the preliminary annualized first-quarter U.S. gross domestic product (GDP), which is expected to grow 2.5% in the first quarter. On Friday, the final value of the U.S. personal consumption expenditures (PCE) price index for March will be the focus of market attention.

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