• Indian Rupee (INR) rises from record lows last week
  • Indian inflation is a headache for the government
  • US Dollar (USD) falls across the board
  • No US data due today but plenty across the week

The US Dollar Indian Rupee (USD/INR) exchange rate is falling at the start of the week, paring gains from last week. The pair gained 0.47% last week settling on Friday at 77.85. At 10:00 UTC, USD/INR trades -0.38% at 77.55.

The Rupee is advancing, benefiting from the weaker USD, even as inflation concerns persist. The Indian government is considering spending an additional 2 trillion Rupees in the 2022/23 fiscal year to help protect consumers from rising prices and multi-year high inflation.

The measures will be double what was announced over the weekend which included tax cuts on petrol and diesel.

Inflation in India rose to an 8-year high in April, while wholesale inflation rose to a 17-year high and has become a major headache for Prime Minister Narendra Modi ahead of elections to several state assemblies this year.

The US Dollar is falling across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades -0.7% at the time of writing at 102.45, extending losses from last week.

The US dollar fell 1.3% across last week, marking its first weekly decline in seven weeks as fears over slowing growth and a possible recession overshadowed a hawkish Federal Reserve.

With inflation persistently high, the Federal Reserve is planning on hiking rates steeply over the upcoming meetings in an attempt to rein in 40-year high inflation.

However, economic data weakened last week with initial jobless claims climbing to a 10-week high and earnings from major retailers coming under pressure owing to rising costs sparking fears of a recession.

Today the USD is extending those losses as risk sentiment improves and investors sell out of the safe-haven buck. There is no high impacting US data today, but there is plenty to come across the week including the release of the minutes to the latest FOMC meeting, US GDP data and PCE index, the Fed’s preferred gauge for inflation.