numbers-and-inr-currency-symbol - INR
  • Indian Rupee (INR) rises for the fifth day
  • India’s retail inflation is expected to slow to 6.73%
  • US Dollar (USD) drops to a 2-month low
  • US inflation was cooler than expected

The US Dollar Indian Rupee (USD/INR) exchange rate is falling for a fifth straight session.  The pair fell -0.02% yesterday, settling on Tuesday at 81.35. Today, at 15:30 USD/INR trades -0.70% at 80.80, trading in a range between 80.76 to 81.92.

The Rupee is roaring higher thanks to weaker-than-expected US inflation. In India, inflation expectations are also in focus. Indian retail inflation is expected to have slowed in October to 6.73% thanks to weaker food prices and owing to a strong comparison from a year earlier.

Inflation remains stubbornly over the Reserve Bank of India’s 6% upper tolerance level. However, it is also down sharply from, 7.4% in September. Whilst this would be a step in the right direction, the RBI is still expected to keep hiking rates.

The US Dollar is falling across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades at -1.67% at the time of writing at 107.70, dropping to a two-month low.

The USD is tumbling lower after US inflation data came in lower than expected. Inflation, as measured by the consumer price index eased to 7.7% year on year in October, down from 8.2% in September and 9.1% in August.

Meanwhile, core inflation which strips out volatile items such as food and fuel, also fell from 6.6% in September, a 40-year high, to 6.3%. Analysts had forecast a decline of 6.5%.

The bigger-than-expected decline in inflation has promoted bets that the Federal Reserve could adopt a less aggressive approach to rate hikes. The market now expects a 50-basis point hike from the Fed in December.

Meanwhile, jobless claims also rose by more than expected. Claims rose by 225,000, ahead of the 220,000 forecasts and up from 218,000 in the previous week. The data suggests that there could be some weakness seeping into the labour market.