• Indian Rupee (INR) falls after wholesale inflation rises
  • RBI could raise rates again in April
  • US Dollar (USD) falls versus major peers
  • US inflation is expected to cool

The US Dollar Indian Rupee (USD/INR) exchange rate is rising for a second day. The pair rose +0.10% in the previous session, settling on Monday at 82.59. At 10:00 UTC, USD/INR trades +0.20% at 82.76 and trades in a range of 82.57 to 82.78.

India’s wholesale inflation cooled in January to 4.73% year on year as some raw material prices eased. This was down from 4.95% recorded the previous month, but the figure was also higher than the 4.54% recorded in December.

Delving deeper into the data, fuel, and power inflation cooled while inflation on manufactured products rose. Meanwhile, food rose at a faster pace in January to 2.95% from 0.65% in the previous month.

The data comes after the Reserve Bank of India raised interest rates by 25 basis points, with analysts expecting that the central bank could hike rates again in April after CPI inflation jumped to a 3-month high of 6.5%.

The US Dollar is rising against the Rupee but falling against its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades -0.19% at the time of writing at 103.15, reversing gains from yesterday.

The US dollar is falling on Tuesday as investors look ahead to the latest US inflation data as measured by the consumer price index. Analysts are expecting the CPI to call further to 6.2% year on year in January, down from 6.5% annually in December. Meanwhile, on a monthly basis, CPI is expected to rise 0.5% up from 0.1%.

Core inflation which strips out more volatile items such as food and fuel, is expected to cool two 5.5% annually down from 5.7%.

Given the blowout U.S. jobs report, which saw 517,000 jobs added in January, investors are wary that inflation may not cool as quickly as hoped. This would support the more hawkish tone that was hard from Federal Reserve policymakers in speeches last week.