inr-currency-symbol - INR
  • Indian Rupee (INR) traces domestic equities higher
  • Indian domestic inflation set to rise to 5.8%
  • US Dollar (USD) falls even as Fed Powell says rates could rise faster
  • US inflation data due tomorrow

The US Dollar Indian Rupee (USD/INR) exchange rate is moving lower on Tuesday extending losses for a third straight session. The pair settled -0.34% on Tuesday at 74.02. At 16:30 UTC, USD/INR trades -0.29% at 73.80.

The Indian Rupee is tracing domestic equities higher. Indian shares rise for a third straight day, boosted by IT stocks which are offsetting losses in the metal index. IT stocks are on the rise ahead of the start of corporate earnings.

The Nifty 50 closed 0.3% higher and the Sensex closed up 0.37%. Both indices are up around 4% so far this year.

Whilst there is no high impacting Indian data due for release today, there is plenty to keep investors busy tomorrow. Indian inflation in addition to industrial production and manufacturing production are due to be released tomorrow.

Inflation is expected to rise to 5.8% year on year in December, up from 4.91% in November.

The US Dollar is holding is trading lower across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies trades -0.33% at the time of writing at 95.68.

The US Dollar is falling lower despite US Federal Reserve Chair Jerome highlight the risk of inflation and confirming that the Fed is prepared to raise interest rates more if needed in order to get inflation under control. Usually, such a hawkish comment would drive the US Dollar higher.

However, Powell also said that it would take up to four Fed meetings to decide the next steps for shrinking the balance sheet, sending the USD lower. US treasury yields are also moving lower pulling the greenback southwards.

Attention will now turn to US inflation data due tomorrow. Expectations are for inflation to reach 7% the highest-level ion 40 years, up from 6.8% in November. Core inflation is expected to be 5.4%, up from 4.9%.