• Indian Rupee (INR) rises after RBI raises interest rates
  • Central bank raises rates by 35 bps
  • US Dollar (USD) falls as recession fears build
  • No high impacting US data is due

The US Dollar Indian Rupee (USD/INR) exchange rate is edging lower on Wednesday after three days of gains.  The pair rose 0.72% yesterday, settling at 82.48. Today, at 11:30, USD/INR trades -0.04% at 82.45, trading in a range between 82.36 to 82.77.

The Indian rupee is rising after the Reserve Bank of India raised interest rates by 35 basis points taking the benchmark lending rate to 6.25%. This is the 5th straight increase in rates and takes the key rate to the highest level in over three years.

Inflation has stayed above the upper end of the RBI’s 2-6% tolerance band all year and while there have been tentative signs that inflation could be easing, the Reserve Bank of India highlighted that persistently high inflation was the main risk. These comments reinforced expectations that the central bank could hike interest rates again soon in the coming meetings.

However, the central bank also said that they believe that peak inflation has passed, strengthening bets on smaller interest rate rises going forward.

The US Dollar is falling across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades at -0.15% at the time of writing at 105.41, snapping a two-day winning run.

The US dollar is pausing for breath after two days of gains as investors way up US recession fears against China reopening after covert lockdowns.

A recent run of stronger-than-expected U.S. economic data has raised concerns that the Federal Reserve will continue to act aggressively to rein in inflation, even if this means paying EU S economy into recession. The big investment banks on Wall Street yesterday warned of every session in the US.

Meanwhile, investors are also digesting the news that China will ease covid restrictions and math testing as it steps away from zero COVID measures. This would be good News for the global economy and could help support risk sentiment.

there is no high impacting U.S. data due today. Instead, attention is starting to turn towards the Federal Reserve interest rate decision next week