inr-bank-notes - INR
  • Indian Rupee (INR) traces domestic equities lower
  • Concerns over US inflation hurts risk sentiment
  • US Dollar (USD) rises after surprise CPI jump
  • US inflation hits 3-decade high

The US Dollar Indian Rupee (USD/INR) exchange rate is heading higher on Thursday for a third straight session. The pair settled +0.31% on Wednesday at 74.39. At 10:00 UTC, USD/INR trades +0.13% at 74.49.

The Indian Rupee is tracing Indian equities lower. Concerns over higher inflation following the US CPI prints dragged on demand for Indian equities. The Sensex fell 0.88% and the Nifty 50 was down 0.9%. The market flocked to safer assets as inflation spiraled in the world’s largest economy.

Today there is no high impacting Indian economic data. Attention is firmly on tomorrow’s inflation data which is expected to show a 4.32% increase year on year in October, down slightly from 4.35% in September. This would mark the fourth straight month that inflation remains within the Reserve Bank of India’s 2-6% comfort zone.

The US Dollar is trading higher across the board on Thursday. The US Dollar Index, which measures the greenback versus a basket of major currencies trades +0.2% at the time of writing at 95.03 after gaining 0.95% in the previous session.

The US Dollar charged higher on Wednesday after data revealed that the cost of living in the US surged to a 30 year high. The consumer price index jumped to 6.2% in October up from 5.4% in September and defying expectations of a move lower to 5.3%. Meanwhile, core inflation which strips out more volatile items such as food and fuel rose 4.6%.

The rise in inflations comes amid rising energy prices, supply chain disruptions and labour shortages and will pile the pressure on the Federal Reserve to raise interest rates. Just last week the Fed still insisted that rising inflation was transitory. However, with wholesale inflation still elevated at 8.6%, consumer prices are likely to stay high for some time yet.

There is no high impacting US data due today, investors are likely to continues digesting yesterday’s inflation numbers.