Just a hint that the US Federal Reserve may go in for an interest rate cut was enough to send a whole basket of Asian currencies, including the Indian Rupee, getting stronger against the US dollar. The Indian Rupee reached a high of ₹68.31 rising as much as 0.36% during trade. There was a rub-off on the government bonds as well, with the 10-year bond gaining slightly to 6.555% yield to an earlier rate of 6.544%.
The hint mentioned above from the Federal Reserve came from the Chairman of the Federal Reserve, Jerome Powell himself while he was testifying to the House Financial Services Committee. Powell took the members of the Committee through the overall global economic scenario and about the slowing down of manufacturing all over and a continuing low level of inflation. These perhaps were sufficient hints for the markets to react the way they did.
There is still the report on the CPI due later in the day and that might further give the forex markets more clues on the way the US dollar may behave or how the other currencies may gain or lose against the premier currency. The Indian Rupee alone has gained 1.9% against the dollar this year. This has been reflected in the investments made by foreign investors in Indian equities and debts to the extent of $10.80 billion and $2.38 billion respectively.
The other currencies to have gained against the US dollar are the South Korean Won (0.85%), the Japanese Yen (0.5%), the Indonesian rupiah (0.5%), the Philippines peso (0.46%), the Taiwan dollar (0.37%), the Thai Baht (0.31%), the Malaysian ringgit (0.27%), the Singapore dollar (0.24%,) and the China Offshore 0.11% and the China Renminbi (0.11%).
These figures definitely indicate an all-round and uniform trend. Again you can get a confirmation from the composite dollar index that reflects the way the dollar performs against a basket of currencies and it was down 0.2%, from 97.104 to 96.906.