• Indian Rupee (INR) traces domestic equities lower
  • Indian inflation is expected to rise to a 16 month high
  • US Dollar (USD) rises versus major peers for a 10th day
  • US inflation data due

The US Dollar Indian Rupee (USD/INR) exchange rate is rising on Tuesday after booking small losses in the previous session. The pair settled -0.17% lower on Monday at 75.81. At 10:00 UTC, USD/INR trades +0.38% at 76.09.

The Indian Rupee is falling in risk off-trade. Demand for riskier assets and currencies such as the Rupee has come under pressure amid concerns of a more hawkish Fed and amid concerns over demand from top consumer China, which hit metal stocks.

The Nifty 50 traded down 1.1% and the Sensex dripped 0.9%.

Attention is also shifting towards inflation data which is expected to show retail inflation jumping to a 16 month high of 6.35% in March, well above the Reserve Bank of India’s upper tolerance band for a third straight month.

The US Dollar is rising across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades at +0.23% at the time of writing at 100.16 after strong gains in the previous session.

The US dollar is rising for a 10th straight day on Tuesday, tracing bond yields higher and ahead of the latest inflation data.

Inflation, as measured by the consumer price index is expected to rise to 8.3% year on year in March, up from 7.9% in February and a fresh 40 year high.

High inflation will support expectations that the Federal Reserve will look to hike rates more aggressively, possibly with a 50 basis point rate hike in May and another in June. This comes after a 25 basis point rate hike in March.

The minutes to the latest Fed meeting showed that the Fed also plans to trim its balance sheet by $95 billion per month at the same time as hiking interest rates.