- Indian Rupee (INR) rises after encouraging WPI inflation
- Domestic equities rise ahead of Infosys results
- US Dollar (USD) trades around 3 month high after CPI jump
- Fed Powell’s testimony awaited
The US Dollar Indian Rupee (USD/INR) exchange rate is edging lower on Wednesday snapping a two day winning run. The pair gained 0.08% on Tuesday settling at 74.59. At 11:40 UTC, USD/INR trades -0.07% lower at 74.53.
The Rupee is advancing after wholesale inflation softened and as domestic equities rose. The Sensex and the Nifty 50 closed 0.25% higher. IT stocks were broadly climbing ahead of Infosys Q1 results due later today.
Indian wholesale price inflation eased in June to 12.07%, down from the record 12.94% reached in May. The easing in inflation came despite a rise in fuel prices and manufactured goods. Fuel prices shot up 32.83% on the back of rising oil prices whilst manufactured goods rose 10.88%.
Oil prices are edging lower offering some support to the Rupee. West Texas Intermediate trades -0.45% after data revealed that Chinese crude imports declined -3% in the first half compared to last year.
The US Dollar is trading lower across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies trades -0.12% at the time of writing at 92.65 just easing off the fresh three month high reached in the previous session.
The US Dollar shot higher after data revealed that inflation in the US surged. Inflation, as measured by the consumer price index jumped to 5.4% year on year in June, up from 5% in May and well ahead of the 4.9% forecast. On a monthly basis, CPI rose 0.9%, marking the fastest pace since 2008.
So far, the Fed has insisted that soaring inflation is transitory. However, a persistently rising CPI figure is putting pressure on the Fed to adopt a more hawkish stance.
Federal Reserve Chair Jerome Powell is due to testify before Congress later today. Investors will be watching to see if this latest CPI print will change Fed Powell’s stance.