USDINR firm on IMF lowering India GDP projection of FY 21 as well as greenback held on to gains against most currencies on Wednesday as renewed questions about a coronavirus vaccine and lack of an agreement on additional U.S. fiscal stimulus prompted a shift to safer assets.
The International Monetary Fund (IMF) on Tuesday projected India’s GDP to plunge in FY21 by 10.3%, revised down since its June forecast of 4.5% drop, reflecting a severe-than-anticipated contraction in economic activities in the first quarter as a result of the nationwide lockdown as well as the rapidly spreading pandemic.
India's federal government on Tuesday allowed 20 states to raise market loans amounting 688.25 billion rupees ($9.39 billion)to meet revenue shortfall in the current financial year ending in March 2021, a government statement said.
Indian authorities released Mehbooba Mufti late on Tuesday, the last major Kashmiri leader held since August last year when the federal government withdrew the troubled region’s autonomy and arrested politicians.
INTRADAY RANGE - 73.23 ( 73.34 - 73.57 ) 73.76
The euro and British pound are likely to extend declines, as a return of restrictions on economic activity in Europe and Britain to battle a second wave of coronavirus infections unnerves investors.
Currency moves, however, are likely to be subdued as the U.S. presidential election looms on Nov. 3, but analysts said sentiment is leaning against riskier bets, which should support the dollar in the coming days.
Sterling also took a hit due to worries about little progress in trade talks between Britain and the European Union and the chance the Bank of England will adopt negative interest rates.
The Australian dollar was little changed in early Asian trade but is likely to add to its 1% decline on Tuesday due to concern about a row with Beijing over coal imports, traders said.
Gold prices slumped as much as 2% on Tuesday, falling beneath key $1,900 support, as negotiations hit a snag again for an economic stimulus to help millions of Americans financially distressed by the coronavirus pandemic.
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