• Indian Rupee (INR) falls as inflation expectations cool
  • Commodity prices are set to fall
  • US Dollar (USD) rises versus major peers
  • Dovish Fed minutes have pulled on the USD.

The US Dollar Indian Rupee (USD/INR) exchange rate is rising for a second straight session.  The pair rose +0.01% yesterday, settling at 81.64. Today, at 15:30 USD/INR trades +0.05% at 81.67, trading in a range between 81.44 to 81.67. The pair is set to rise 0.08% across the week, rising for a second straight week.

According to India’s finance ministry is India’s inflation is expected to cool in the coming months as commodity prices start to fall. India’s annual retail inflation has remained stubbornly above the central bank’s upper tolerance limit of 2% to 6% since the start of the year. Most recently, inflation has eased to 6.77% in October.

International commodity prices could cool further as global growth slows, which will help inflation ease.

The Reserve Bank of India expects inflation to return to below 6%, the upper tolerance band in the fourth quarter of the financial year, which started in April 1 2022.

The Finance Ministry also said that the global slowdown could impact India’s exports. According to the latest official trade data, India’s trade deficit widened in October to $26.91 billion from $25.71 billion in the previous month

The US Dollar is rising across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades at +0.3% at the time of writing at 106.19 after falling  -0.21% yesterday. The dollar is set to rise 0.3% across the week.

The US dollar is pushing higher at the end of the week, after several days of losses, in quiet trade owing to the Thanksgiving holiday.

The dollar has traded under pressure this week following the dovish FOMC minutes released on Wednesday. The market is growing increasingly confident that the Federal Reserve will slow the pace of rate hikes in the December meeting to 50 basis points.

There is no data due today. Investors will look ahead to next week when Fed Chair Powell is due to speak on Wednesday.