11 Dec 2022

USD gains despite recession fears

USD ended the week higher amid fears that the U.S. economy was heading toward recession, ahead of next week’s crucial Federal Reserve meeting. INR falls as inflation is set to cool in November.

author dp
Team INRBonds
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  • USD ended the week higher amid fears that the U.S. economy was heading toward recession, ahead of next week’s crucial Federal Reserve meeting.
  • Amid recession fears, the bets are increasing that the Federal Reserve will slow the pace of interest rates going forward
  • US initial jobless claims showed that the number of U.S. citizens claiming unemployment benefits for the first time rose again to 230,000, up from 225,000 in the previous week.
  • The Reserve Bank of India raised interest rates by 35 basis points taking the benchmark lending rate to 6.25%. This is the 5th straight rate increase and takes the key rate to the highest level over three years.
  • Inflation has stayed above the upper end of the RBI’s 2-6% tolerance band all year and while there have been tentative signs that inflation could be easing, the Reserve Bank of India highlighted that persistently high inflation was the main risk.
  • Inflation in India, as measured by consumer prices, is expected to fall to a nine-month low of 6.4% in November as food prices moderated.

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