inr-bank-notes - INR
  • Indian Rupee (INR) falls in risk off-trade
  • Oil prices fall to $95.00 pb
  • US Dollar (USD) falls versus major peers
  • US CPI data due

The US Dollar Indian Rupee (USD/INR) exchange rate is rising for a fifth straight session. The pair settled 0.05% higher on Tuesday at 79.45 after trading in a range of 79.46 – 79.66. At 11:00 UTC, USD/INR trades +0.18% at 79.59. The pair is set to lose -0.07% across the week.

The Indian Rupee hit a record low for a third consecutive session as investors continued to ditch the riskier assets and currencies ahead of pending US inflation data, which could determine the pace of tightening from the Federal Reserve.

Emerging Market currencies have come under huge pressure in recent months amid expectations that the Federal Reserve will hike rates faster and further than its peers.

Falling oil prices could help limit the losses. Oil tumbled 8% yesterday to $95.00 per barrel on fears over the demand outlook as economic growth slows.

The US Dollar is rising against the Rupee but falling versus its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades +0.1% at the time of writing at 107.97 snapping a three-day winning run.

The USD has run higher across the week on a combination if hawkish Federal Reserve bets and safe-haven flows as investors grow increasingly worried about a recession.

Aggressively monetary policy tightening to tame inflation could slow the economy by too much. Today the focus is firmly on US inflation data as measured by the consumer price index. CPI is expected to continue rising to 8.8% year on year in May, up from 8.6% in April, as energy prices continued to rise across the month.

Core CPI with excludes more volatile items such as food and fuel are expected to ease to 5.8% down from 6% YoY. While this is a move in the right direction it is not enough of a slowdown for the Fed to change its course.