• Indian Rupee (INR) edges lower after 3-days of gains
  • Retail inflation rises 7.4%
  • US Dollar (USD) rises after hot inflation
  • A more aggressive rate hike coming?

The US Dollar Indian Rupee (USD/INR) exchange rate is rising on Thursday after three days of losses. The pair fell -0.07% yesterday, settling at 82.20, trading in a range between 82.15 to 82.37. At 15:00 UTC, USD/INR trades +0.51% at 82.61.

India’s inflation is expected to peak in September and then gradually cool in the months after. Easing commodity prices and food inflation could help inflation ease.

India’s inflation rose to a 5-month high of 7.4% year on year in September, from 7% the previous month.

Indian domestic equities fell in risk off trade. The Sensex closed 0.6% lower at 57,235. The Nifty 50 closed 0.6% lower.

Separately oil prices are rising despite hotter-than-expected US inflation data, which means higher interest rates and slower growth. West Texas Intermediate trades + 1.6% at $87.70.

The US Dollar is rising across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades +0.17% at the time of writing at 113.51, marking its seventh straight day of gains.

The US dollar surged higher after US inflation jumped to a fresh 40-year high. US consumer prices eased by less than forecast to 8.2% year on year, down from 8.5% in August but above the 8.1% forecast. Meanwhile, core inflation rose 6.6% annually, up from 6.3% and ahead of forecasts of 6.5%.

The hot inflation data saw investors reassess the likelihood of the Federal Reserve hiking interest rates by 75 basis points to 95%, up from 80% prior to the data. Also, investors started to price in the probability of a 100 basis point rate hike at 5%.

A larger rate hike from the Federal Reserve will make it harder to avoid a recession. Recession fears have been rising, with the Conference Board now pricing in a 96% chance of a recession in the next 12 months.