counting-inr-bank-notes - INR
INR bank notes
  • Indian Rupee (INR) holds steady after strong gains yesterday
  • Indian wholesale inflation remains in double digits
  • US Dollar (USD) eases despite inflation rising
  • US initial jobless claims due

The US Dollar Indian Rupee (USD/INR) exchange rate is holding steady on Thursday after booking losses in the previous session. The pair settled down -0.24% on Wednesday at 75.28. At 11:00 UTC, USD/INR trades -0.01% at 75.27.

India’s wholesale price inflation remained in double digits for a sixth straight month in September, feeding concerns over inflationary pressures rising as commodity prices and energy prices remain elevated.

Annual wholesale price inflation was 10.66% in September, slightly down from 11.39% in August thanks to slower increases in some food prices. However, commodity prices are expected to remain high over the coming months and companies could start to pass those rising costs to customers, which would lift consumer prices.

Rising prices pose a risk to the economic recovery. The Reserve Bank of India is keen to keen interest rates low in order to support the economic rebound. Elevated inflation could force the central bank to hike rates sooner.

The US Dollar is moving lower across the board on Wednesday. The US Dollar Index, which measures the greenback versus a basket of major currencies trades -0.34% at the time of writing at 93.76, extending losses from the previous session.

The US Dollar trades under pressure despite consumer prices rising by more than expected and despite the minutes from the latest Federal Reserve monetary policy meeting indicating that the Fed will start tapering bond purchases mid-November to December.

US consumer price inflation rose to 5.4% year on year, up from 5.3% in August. On a monthly basis CPI rose 0.4%, ahead of the 0.3% forecast. Yet despite the rise in inflation, the US Dollar sold off. This suggests that the markers are once again buying into the Fed’s message that the rise in prices will be transitory.

Today attention is in the release of US initial jobless claims. Analysts are expecting claims to fall again this week to 319, 000, down from 326,000 last week.