• Indian Rupee (INR) falls on USD strength
  • RBI meeting begins with an announcement on Thursday
  • US Dollar (USD) rises as investors look to inflation data
  • US trade balance

The US Dollar Indian Rupee (USD/INR) exchange rate is moving higher on Tuesday after booking small losses in the previous session.  The pair settled fell -0.02% on Monday, settling at 74.62. At 11:30 UTC, USD/INR trades +0.14% at 74.73.

The Indian Rupee is edging lower as the Reserve Bank of India’s monetary policy meeting kicks off. The two-day meeting will see the RBI monetary policy announcement made on Thursday. The broad expectation is that the central bank will keep the repo rate steady and raise the reverse repo.

Today the Rupee is under pressure, tracing domestic equities lower. Indian stocks are falling for a fourth straight  day, weighed down by energy and banking stocks. The Nifty 50 closed -0.6% lower, whilst the Sensex slipped -0.6% as well.

Oil prices were offering some support to the Rupee as they edged lower. West Texas Intermediate trades -1.8% at $88.50 amid concerns that oil sanctions on Iran could be lifted.

The US Dollar is rising across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies trades +0.22% at the time of writing at 95.61 after booking losses on Monday.

The US dollar is pushing higher as investors turn their attention to US inflation data due to be released on Thursday. The start of the week has been quiet as far as economic data is concerned. Last Friday, US non-farm payroll data revealed that the US economy didn’t see a hit from Omicron over December and January, with over 900k jobs created.

The inflation print will be key, high inflation could spark expectations of the Fed adopting a more hawkish approach to tightening monetary policy.

Bets are already rising that the Fed could raise interest rates by as much as 50 basis points in March, in an attempt to rein in surging inflation. Hose bets are likely to increase should inflation come in ahead of forecasts.