• Indian Rupee (INR) rises as WPI inflation is below forecasts
  • WPI was 12.4% YoY in August
  • US Dollar (USD) steadies after CPI-inspired gains yesterday
  • US PPI due later

The US Dollar Indian Rupee (USD/INR) exchange rate is falling on Wednesday after strong gains in the previous session. The pair settled +0.3% yesterday at 79.57. At 10:00 UTC, USD/INR trades +0.19% at 79.50.

India’s wholesale inflation fell by more than forecast in August thanks to falling oil prices and the impact of higher interest rates. The wholesale price index (WPI) rose 12.41% annually in August, down slightly from 13.93% in July and below forecasts of 13%. The data suggests that wholesale inflation peaked in May at 16% annually. This was still the 17th straight month that inflation remained in double digits.

The data comes following retail inflation data, which rose by more than expected in August, as food prices kept rising. The rise in retail inflation came after three months of declines.

The Reserve Bank of India is broadly expected to hike interest rates when it meets later this month.

The US Dollar is falling across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades at -0.2% at the time of writing at 109.58, after booking strong gains in the previous session.

The US dollar bulls are pausing for breath after surging in the previous session. The USD jumped after data showed that US inflation fell by less than expected in August and core inflation, which removes more volatile items such as food and fuel rose by more than expected to 6.3% annually, up from 5.9%.

The data lays the way for the Federal Reserve to hike interest rates more aggressively in the coming FOMC meetings. Any expectations of a 0.5% hike in September have been replaced with fears of a 1% rate rise. However, the US central bank is most likely to hike rates by 0.75% points and continue aggressive hikes across the rest of the year.

Today all eyes are on US wholesale inflation data, PPI, which is expected to ease slightly to 7.1% annually.