- Indian Rupee (INR) rises after falling last week
- Inflation could fall below 6% by Q4
- US Dollar (USD) rises versus major peers on safe-haven flows
- Jackson Hole Symposium in focus this week
The US Dollar Indian Rupee (USD/INR) exchange rate is falling on Monday after booking gains across the previous week. The pair rose 0.3% last week settling on Friday at 79.92 after trading in a range 79.15 to 79.94. At 11:00 UTC, USD/INR trades -0.03% at 79.87.
India’s headline inflation could start to cool below 6% in the final quarter of the year according to some analysts. The forecasts come after the minutes from the Reserve Bank of India’s which suggested that the central bank could hike rates by 50 – 60 basis points by the end of the year.
India’s consumer price inflation fell to 6.7% in July, cooling for the third straight month. However, even though inflation appears to have peaked in India, the central bank still thinks that the outlook remains uncertain.
The minutes also showed that the RBI considers 4% inflation as essential to sustain economic growth over the longer term.
The US Dollar is falling versus the Rupee but rising versus its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades +0.15% at the time of writing at 108.32 after rising 2.4% last week.
The USD rose last week in its best weekly performance since April 2020 as the market once again started to price in a more hawkish Federal Reserve. The minutes to the latest Fed meeting showed that the US central bank was keen to keep raising interest rates.
US economic data was also better than expected raising optimism that the US economy could avoid a deep economic downturn.
Today the USD is rising as hawkish Federal Reserve bets dominate ahead of the Jackson Hole Symposium later in the week. Here Federal Reserve Chair Powell is expected to reiterate the Fed’s aggressive monetary policy stance. US inflation data is also due to be released on Friday.