- Indian Rupee (INR) traces domestic equity markets higher
- Indian WPI inflation surges to 10.49% in April as commodity prices rise
- US Dollar (USD) extends losses after Friday’s weak retail sales
- Fed sticks to dovish tone
The US Dollar Indian Rupee (USD/INR) exchange rate is moving lower on Monday, extending losses from the end of last week. The pair settled -0.24% lower on Friday at 73.29 towards the low of the day. At 11:00 UTC, USD/INR trades -0.08% higher at 73.22.
The Rupee is tracing domestic equities higher. The Sensex closed the session up 1.7%. Whilst the Nifty 50 gained 1.6%.
Indian wholesale inflation (WPI) surged to 10.49% in April, up from 7.39% recorded in March. The sharp rise in wholesale prices comes on the back of a surge in commodity prices in recent weeks and particularly in crude oil. India is the world’s third largest importer of oil.
Consumer price inflation (CPI) eased lower in April to 4.29% driven by a decline in food prices.
The Reserve Bank of India will be watching closely to see whether the surge in WPI feeds through into a rise in CPI down the line.
For now, the RBI is expected to maintain its supportive stance whilst the country battles a resurgence in covid cases.
The US Dollar is trading higher lower across the board on Thursday. The US Dollar Index, which measures the greenback versus a basket of major currencies trades -0.8% at the time of writing at 90.26 after paring earlier gains.
The US Dollar fell on Friday after weaker than forecast retail sales data. US retail sales stalled in April in the wake of a sharp advance in the previous month when the pandemic stimulus checks were received by millions of American.
In March retail sales jumped 10.7% month on month the largest jump since records began. In April retail sales registered at 0% increase, below the 1% gain analysts had penciled in.
The weaker retail sales, in addition to flat consumer confidence means that it is easier for the market to believe the Fed’s supportive stance.